KUALA LUMPUR, May 24 – Diesel subsidies cost the government RM1bil a month, while losses from leakages amount to a whopping RM4.5mil a day, says Finance Minister II Datuk Seri Amir Hamzah Azizan.
He said the implementation of the targeted subsidy for diesel is among the key reform measures under the Ekonomi Madani framework to ensure sustainable fiscal management and to address the issue of serious leakages within the system, without compromising the rakyat’s welfare.
“The diesel subsidy in Malaysia rings up a bill of RM1bil every month for the government. The disparity with the market price has incentivised years of smuggling into neighbouring countries, and allowed large segments of the commercial sector to increase profits on the back of cheap diesel, which they are not eligible for in the first place,” he said.
Amir also said losses due to leakages amount to about RM4.5mil per day.
“We should be reminded that blanket subsidies are unsustainable over the long run,” he said in a LinkedIn post.
He said the Finance Ministry is working closely with other relevant ministries on fine-tuning the mechanism to ensure only the deserving will receive subsidies.
Amir had also attached a video of him addressing the matter at the @EY C-Suite Forum on May 14.
In the video, he said the subsidy rationalisation was required because there were leakages and the incentives given were too wide.
At the same time, tackling the problem is no walk in the park, as the government must get the mechanism for fuel subsidy rationalisation right.
“Subsidy rationalisation will come, but we will not press the button if we have not got this thing sorted out well.
“What the government is doing now is fine-tuning it to make sure that when it presses the button, it gets it right and it actually looks after the right groups and actually gets enough savings from the system as it stops,” he added.
