This article first appeared in The Edge Malaysia Weekly on June 3, 2024 - June 9, 2024

With Malaysia known as one of the most subsidised nations in the world, and the perceived political mileage on fuel subsidy, it is no surprise to see many groups arguing for eligibility for the targeted diesel subsidy of RM200 per month when diesel prices are floated sometime this year.

In a May 29 statement, MCA Youth urged the government to review its decision to exclude operators of tour buses and vans from the subsidy programme, arguing that it would “severely” impact the tourism industry.

Unlike regular buses and taxis, tour buses are not a form of public transport. With tourism being discretionary spending and an area that foreigners are likely to benefit from, it is not hard to see why the government did not include tour operators in the list for diesel subsidy alongside fishermen and individuals and businesses engaged in agriculture and certain industrial and enterprise activities. These exemptions are likely to prevent knock-on effects on basic food items like fish and vegetables, which all consumers stand to benefit from.

Granted, tourism is an important segment of the economy but the government can help the industry in other ways such as reciprocal visa-free agreements with countries like China.

More groups will certainly ask for exemption but the government must stand firm and not give to more than is necessary as that increases the chances of leakage and defeats the purpose of subsidy rationalisation.

Diesel is sold at double Malaysian prices just across the border in Thailand and neighbouring Indonesia and four times more across the Causeway in Singapore. Smugglers are clearly profiteering from the vast difference, with the government having subsidised 6.1 billion litres at RM1.4 billion in 2019 and 10.8 billion litres at RM14.3 billion last year. If only 6.1 billion litres were subsidised last year, the cost should have been no more than RM8.1 billion — or RM6.2 billion less than what was spent, simple calculations show.

Every moment diesel continues to be subsidised delays progress towards saving taxpayers’ money that can be better spent on benefiting more Malaysians. Having talked about subsidy rationalisation for some time, it is high time to walk the talk on diesel.

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