Malaysia to increase diesel fuel prices by 50% on Monday

Diesel fuel prices across much of Malaysia are poised to surge by approximately 50 per cent on Monday, marking a significant shift by the government away from broad subsidies towards a more targeted approach primarily aiding the underprivileged, according to Reuters.

Long accustomed to heavily subsidising fuel, cooking essentials, and staple items like rice, Malaysia has grappled with an escalating subsidy bill in recent years due to soaring commodity prices, placing considerable strain on state finances. The diesel subsidy expenditure alone skyrocketed from 1.4 billion ringgit in 2019 to a staggering 14.3 billion ringgit by 2023.

In response, the government announced plans last month to curtail diesel subsidies, projecting annual savings of around 4 billion ringgit ($853.24 million) redirected towards low-income demographics. The Ministry of Finance disclosed in a statement on Sunday its intention to realign diesel fuel prices with market rates.

Effective midnight Monday, diesel prices will ascend to 3.35 ringgit ($0.71) per liter at all petrol stations throughout Peninsular Malaysia, while remaining at 2.15 ringgit per litre in Malaysian states and territories on Borneo. This pricing structure also extends to eligible logistics vehicles under the government’s subsidised diesel control system.

Furthermore, reduced diesel rates have been earmarked for specific sectors, including fishermen and land-based public vehicles such as school buses and ambulances.

To cushion the blow for affected segments, the government pledges cash assistance to qualifying Malaysian individuals with diesel vehicles, along with small-scale farmers and commodity smallholders to mitigate potential income disruptions.

Despite these subsidy adjustments, diesel prices in Malaysia are poised to remain comparatively low within Southeast Asia, with rates approximately 8.79 ringgit per litre in Singapore, 4.43 ringgit in Indonesia, and 4.24 ringgit in Thailand, as per the ministry’s data.

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