KUALA LUMPUR (Oct 13): The government said it will enforce targeted subsidies on diesel in phases in order to prevent leakages and smuggling of the product, but assured selected segments “such as freight companies” will not be affected to reduce its impact on prices of goods.
“Other users will be imposed higher prices of the fuel," Anwar said when tabling Budget 2024 in the Dewan Rakyat here.
However, the Budget did not touch on the targeted subsidy on petrol (RON95), which had capped prices at RM2.05/liter since February 2021.
Diesel is currently capped at RM2.15 per litre at the pumps, compared with current market price of RM3.75.
“This means the government pays RM1.60 for every liter of diesel, or RM1.5 billion in total.
“Based on consumption data, sales of subsidised diesel rose 40% since 2019, but the number of vehicles using diesel only rose by 3%. This points to the possibility of very serious smuggling activities due to extremely cheap Malaysian diesel prices,” Anwar said.
Meanwhile, for fishermen, the government will continue to maintain a subsidy for diesel at the lowest RM1.65 per litre for certain categories of fishermen, with a quota of 840 million litres per year.
"Fishermen are also provided with a living allowance of up to RM300 ringgit per month and a Fishermen Catch Incentive of up to RM1,000 per month. The government also allocates RM10 million for the purpose of constructing new and repairing fishermen's houses," he said.
Concurrent with the subsidy rationalisation program, the government expects to re-channel the savings into additional cash assistance, with the Rahmah Cash Aid set to increase to RM10 billion in 2024, from RM8 billion in 2023.
Temporary price control for chicken and eggs to be announced
The targeted subsidies in Budget 2024 will also be enforced on the chicken and egg prices. The government is set to release the temporary price control to ensure the availability of chicken and egg supply in the local market, which is expected to be announced in two weeks.
"Alhamdulillah (Praise be to God), the current trends indicate that the supply of chicken and eggs has begun to stabilise, and the current market prices are below the control ceiling price.
“Therefore, the temporary price controls will be lifted so that the local market can operate [their business] to ensure the availability of chicken and eggs. The announcements regarding these further concrete steps will be made by the Ministry of Agriculture and Food Security within two weeks," added Anwar.
Note that the government has allocated RM3.8 billion in subsidies for chicken and eggs to control the sharp increase in these staple food prices and to address the supply shortages.
Other subsidy measures include:
- RM2.6 billion for the paddy farmers and fishermen
- RM225 million to cover delivery costs for basic goods to rural areas under the Community Drumming Program
- RM246 million to support the operation of stop-and-go buses
- RM209 million to subsidise Sabah, Sarawak rural air transportation costs
- Continuation of My50, RM50 monthly pass for Prasarana public transport services in Klang Valley
Go here for our comprehensive Budget 2024 coverage.