KUALA LUMPUR: On Monday, June 10, diesel fuel prices are expected to increase by approximately 50% throughout most of Malaysia as the government transitions from expensive general subsidies to a focused strategy that primarily aids the poor.
In recent years, as commodity prices have surged and put pressure on government coffers, Malaysia, a country that heavily subsidizes essential goods like rice, cooking oil, and fuel, has witnessed an increase in its subsidy bill to all-time highs.
The cost of its diesel subsidies increased tenfold between 2019 and 2023, from RM1.4 billion to RM14.3 billion.
The government announced last month that it expects to save roughly RM4 billion (US$853.24 million) annually by cutting diesel subsidies this year. The savings are expected to be directed toward low-income groups.
In a statement released on Sunday, the Finance Ministry said that it will start adjusting diesel fuel prices to reflect current market rates.
According to the ministry, diesel fuel will now retail for RM3.35 per litre at all gas stations in Peninsular Malaysia as of midnight. This is the unsubsidized market price determined by the Automatic Pricing Mechanism formula using the average for May 2024.
Under the government’s subsidized diesel control system, it will continue to be RM2.15 per litre in Malaysian states and territories on Borneo and for logistics vehicles that qualify.
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