PUTRAJAYA: Diesel subsidy leakages, which jumped 10-fold to RM14.3 billion last year from RM1.4 billion in 2019, has led to the government opting for the rationalisation of the fuel subsidy in Peninsular Malaysia.
Finance Minister II Datuk Seri Amir Hamzah Azizan said the leakages were due to a significant price difference with the retail price at the pump at RM2.15 per litre while the market price was around RM3.50 per litre.
He said the price difference was much higher in neighbouring countries: RM4.12 per litre in Thailand, RM4.73 in Indonesia and RM8.87 in Singapore.
"The increase in leakages is not only due to the price increase but also the amount of subsidised diesel used and smuggling.
"The leakages of subsidised diesel have risen to 10.8 billion litres in 2023 from 6.1 billion litres in 2019.
"Seventy per cent of the increase in consumption is due to leakages.
"The easiest step is to float the price of diesel to overcome the leakages, which are increasing every year.
"When we float the price, the price gap compared with neighbouring countries also decreases," he said at a briefing recently.
Amir Hamzah said the implementation of targeted subsidies for diesel could reduce the difference between the retail price at the pump and the market price, which would help overcome leakages.
He said the government would introduce a new form of assistance, Madani Subsidy Assistance Program (Budi Madani), to help the needy.
He said Budi Madani included five elements involving existing and new recipients.
"For public transport vehicles, more than 20,000 recipients will benefit through the Subsidised Diesel Control System (SKDS 1.0), where subsidies are channelled through fleet cards for 10 types of public transport vehicles.
"Fishermen will receive the Fishermen's Diesel Subsidy Scheme for categories A/B/C1 where the subsidy quota is based on the catch."
For new recipients, he said, the government would expand SKDS 1.0 to SKDS 2.0 to cover 23 new segments of goods transport vehicles.
The recipients would get fleet cards to continue buying subsidised diesel at RM2.15 per litre.
This was to reduce the impact on the price of consumer goods with more than 400,000 commercial vehicles receiving benefits, he added.
"For the people, monthly cash aid of RM200 to more than 300,000 eligible non-luxury individual diesel vehicle owners will be offered.
"Registration for this aid opened last Tuesday. People can apply before June 3 to receive cash aid in mid-June.
"About 300,000 farmers and smallholders with annual sales of between RM50,000 and RM300,000 will receive interim monthly cash aid."
He added that for the monthly cash aid to the public, 70 per cent of recipients would benefit greatly due to their daily journey of less than 60km.
Those who can apply are Malaysian individual diesel vehicle owners with an individual or joint annual income of less than RM100,000.
"The vehicle's registration must have the recipient's identity card number. The vehicle must also have an active road tax and not be a luxury vehicle less than 10 years old.
"They can apply at https://budimadani.gov.my."
For farmers and smallholders, Amir Hamzah said five ministries were involved in Budi Madani.
"The Plantation and Commodities Ministry and the Agriculture and Food Security Ministry will regulate the smallholder segment, while the Domestic Trade and Cost of Living Ministry will regulate SKDS 1.0 and SKDS 2.0.
"The Transport Ministry will verify diesel vehicles and the Finance Ministry will verify and channel all cash aid schemes to recipients."
