SUBSIDY RATIONALISATION BEGINNING TO BEAR FRUIT QUICKLY, CURB SMUGGLING AND INCREASE NATION’S FINANCES

By Mikhail Raj Abdullah

KUALA LUMPUR, July 2 (Bernama) – In less than a month, the government’s bold move to rationalise diesel subsidies is beginning to pay off, particularly in curbing smuggling.

This follows the government’s decision to set the retail price for diesel fuel at RM3.35 per litre effective June 10, 2024 at all petrol stations across Peninsular Malaysia.

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Nevertheless, the retail price of diesel fuel for Sabah, Sarawak and Labuan remains at RM2.15 per litre.

Finance Minister II Datuk Seri Amir Hamzah Azizan’s revelation at the Dewan Rakyat that average daily sales of diesel in Peninsular Malaysia have fallen by more than 30 per cent is clear evidence smuggling is being nipped.

Even more telling is that petrol stations in border areas experienced diesel sale reductions of 40 to 50 per cent.

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While Prime Minister Datuk Seri Anwar Ibrahim’s administration received immense brickbats for taking a bold step to rationalise subsidies unlike that of his predecessors, the positive effects are already evident within a short period of time.

It was troubling to note that Malaysia was losing a staggering RM10 billion to diesel smugglers, according to Anwar when he tabled Buget 2024 in October last year.

This was a financial liability that cannot be allowed to continue and that something had to be done to curb the menace and Anwar, who is also Finance Minister, took the first step to this end on June 10 this year.

The fact that there has been a significant decrease in diesel sales since the subsidy retargeting began and commercial diesel sales showing an increasing trend is clear proof that the rationalisation is reducing leakages.

Despite brickbats by certain quarters when it was implemented initially, the government’s move is showing definitive signs it is good for the nation.

Most importantly, it has reduced the incentive to smuggle – a menace so rampant especially at the border areas.

It is mind boggling that subsidised diesel usage increased by over 80 per cent, from 6.1 billion litres in 2019 to 10.8 billion litres in 2023, despite no significant rise in diesel vehicles.

None of the previous government administrations took steps to reduce subsidies, but preferred to be populist and not bold enough to nip smuggling.

A staggering three million litres of diesel is smuggled out of the country everyday resulting in daily losses of RM4.5 million, no thanks to both local and foreign syndicates working hand in glove to rob the nation.

The government, which spent RM14.5 billion on diesel subsidies in 2023, is expected to save around RM4 billion annually due to the rationalisation measures.

Anwar’s administration should also be lauded for providing special assistance for targeted groups, including the BUDI MADANI financial assistance initiative for B40 and M40 diesel vehicle owners.

In the final analysis, foreigners gained while Malaysians were the losers under the former diesel subsidy scheme.

Such a state of affairs cannot be allowed to continue.

It is noteworthy that the government has warned smugglers that it is now focused on stopping all subsidy leakages.

That various enforcement operations will be intensified comes as a relief to reduce smuggling significantly and if possible wipe out the menace.

In the long run, subsidy rationalisation will make available more funds to be utilised for the welfare of the rakyat and the economy in more ways than one.

As Anwar and his administration has promised, the benefits of the subsidy rationalisation will be returned to the people.

-- BERNAMA