June 22, 2024
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OIL & GAS

Malaysia to Cut Blanket Diesel Subsidies, Price to Rise by 50%

Diesel fuel prices in much of Malaysia will rise by approximately 50% starting Monday as the government shifts from blanket subsidies to a targeted approach aimed at aiding the needy.

This change comes as Malaysia, which has heavily subsidized fuel, cooking oil, and rice among other basic commodities, faces a surge in its subsidy bill due to rising commodity prices, straining government finances.

According to Reuters, the diesel subsidy bill alone has skyrocketed from 1.4 billion ringgit in 2019 to 14.3 billion ringgit in 2023.

Last month, the government announced its plan to cut diesel subsidies, expecting to save about 4 billion ringgit ($853.24 million) annually. These savings are intended to be redirected to support low-income groups.

According to a statement from the Finance Ministry on Sunday, diesel fuel prices will now align with market rates. The retail price of diesel fuel will increase to 3.35 ringgit ($0.71) per litre at all petrol stations across Peninsular Malaysia starting at midnight.

However, it will remain at 2.15 ringgit per litre in Malaysian states and territories on Borneo and for eligible logistics vehicles under the government’s subsidized diesel control system.

Lower diesel prices have also been set for fishermen and land public transport vehicles, including school buses and ambulances. To mitigate the potential impact on incomes, the government will provide cash assistance to eligible Malaysian individuals owning diesel vehicles, as well as small-scale farmers and commodity smallholders.

Despite these cuts, Malaysia’s diesel prices will remain among the lowest in Southeast Asia. For comparison, diesel retails at the equivalent of 8.79 ringgit per litre in Singapore, 4.43 ringgit in Indonesia, and 4.24 ringgit in Thailand.

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