The government has set a date for the rationalisation of diesel subsidies, but will only make the announcement at an appropriate time. This is to minimise speculative inflation from occurring as much as possible, according to economy minister Rafizi Ramli.

“It’s just that the sequencing has to be correct and it is about balancing and reducing the risk of knock-on inflation. We have figured it out,” he said, adding that the government will have to make sure that there is no unnecessary knock-on effects on inflation, as Bernama reports.

He explained that another reason for not announcing the date early on is to prevent hoarding of the fuel from taking place. “Sometimes if it is an early plan, suddenly users will ‘stock up’ early because they know the price will go up in two or three months,” he said.

“If we do diesel subsidy retargeting for the purpose of managing hoarding and smuggling, announcing the date will contribute towards the spike in smuggling,” he explained, adding that it would be impossible to carry out stricter enforcement, given that there are only about 2,500 enforcement officers.

The removal of a blanket subsidy for diesel will see targeted subsidies being dispensed via the Budi Madani assistance programme. Announced on May 27, the programme is open to private owners of diesel-powered vehicles as well as agriculture smallholders in Peninsular Malaysia. Eligible recipients in both categories will receive a RM200 monthly sum in financial assistance.

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