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KUALA LUMPUR: Diesel prices in most parts of Malaysia will rise by about 50 per cent on Monday (June 10) as the government begins to shift away from costly blanket subsidies to targeted subsidies that mainly help those in need.
Malaysia heavily subsidizes the prices of basic commodities such as fuel, cooking oil and rice, and its subsidy bill has risen to record levels in recent years as commodity prices have soared, putting pressure on government coffers.
Its diesel subsidy bill alone has risen tenfold from RM1.4 billion in 2019 to RM14.3 billion in 2023.
The government said last month Plans to cut diesel subsidies Annual savings of about RM4 billion (US$853.24 million) are expected this year, with the savings expected to be redirected to lower-income groups.
The Finance Ministry said in a statement on Sunday that it will start setting diesel prices to bring them in line with market prices.
Malaysia’s Transport Ministry said the retail price of diesel will increase to RM3.35 per litre at all petrol stations in Peninsular Malaysia from midnight.
The price of diesel will remain at RM2.15 per litre in all Malaysian states and regions in Borneo, as well as for eligible logistics vehicles under the government’s subsidised diesel control system.
The ministry said it had also reduced diesel prices for fishermen and land public transport such as school buses and ambulances.
The ministry said the government will provide cash assistance to eligible Malaysian individuals with diesel vehicles as well as small-scale farmers and commodity smallholders to mitigate the potential impact on their income.
The transport ministry said despite the subsidy cut, Malaysia’s diesel prices will remain the lowest in Southeast Asia, with diesel retailing at RM8.79 per litre in Singapore, RM4.43 per litre in Indonesia and RM4.24 per litre in Thailand.
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