Malaysia begins fuel subsidy reform: diesel price jumps 56%

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Diesel prices in Malaysia surged by 56% overnight, marking the start of the government's fuel subsidy rationalisation programme. This significant change comes into effect on June 10, 2024.

What's Changing?

  • Previously capped at RM2.15 per litre since February 2021, diesel prices are now floated, meaning they will fluctuate based on global market prices.
  • The new price for diesel is RM3.35 per litre, a substantial increase of RM1.20.

Why the Change?

The government aims to achieve several goals with this reform:

  • Reduce fiscal burden: Fuel subsidies have placed a strain on Malaysia's budget. This change aims to lessen that burden.
  • Promote fuel efficiency: Higher prices may incentivize consumers to be more mindful of fuel consumption and seek out fuel-efficient vehicles.
  • Target subsidies: The government might implement targeted subsidies in the future to ensure essential users are not disproportionately affected.

What to Expect?

  • The impact will likely be felt most by sectors reliant on diesel, such as transportation (buses, trucks) and industries (manufacturing, agriculture).
  • Consumers might see an increase in transportation costs due to potential fare hikes.

The government has assured that the subsidy rationalisation will be implemented carefully. It remains to be seen how this reform will affect the Malaysian economy and masyarakat (society) in the long run.

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