KUCHING: While subsidy rationalisation is crucial, its implementation must be carried out carefully to ensure it doesn’t disproportionately burden those who rely on these subsidies.
Bandar Kuching MP Dr Kelvin Yii Lee Wuen has voiced concerns regarding the upcoming diesel subsidy rationalisation, as announced by Prime Minister Datuk Seri Anwar Ibrahim, to introduce a targeted diesel subsidy in phases as part of the Budget 2024.
While acknowledging the necessity of this step to address fiscal challenges, he emphasised the importance of a well-thought-out and transparent approach to avoid disproportionately affecting those in need.
“I urge for a proper timeline to be communicated to the public as well as a comprehensive implementation mechanism to be announced so that in our efforts to reduce waste and corruption, we do not overburden those who really need it.
“This is especially true for diesel subsidy rationalisation, which affects many in Sabah and Sarawak who depend on diesel vehicles due to the demographics of these two regions.
“That is why I suggest that any subsidy rationalisation, especially for diesel, be done gradually to allow the people and the market to adjust.
“There must not be a sudden, huge increase or for the price to be floated immediately to prevent a sudden shock to the market,” he said in a statement.
Currently, he said the open market price for diesel stands at RM3.75 per litre, while the subsidised price is set at RM2.15 per litre, resulting in a government subsidy of RM1.60 per litre, totalling approximately RM1.5bil.
He noted that consumption data indicates a substantial increase in subsidised diesel sales, up to 40 per cent since 2019, despite a less than 3 per cent growth in the number of diesel-powered vehicles.
This, he stressed, has raised concerns about potential smuggling activities due to the low price of diesel in the country.
To address these challenges, Dr Yii, who is the Democratic Action Party Socialist Youth (DAPSY) chief proposed a more measured approach.
He suggested that, while certain exceptions would exist, such as continuing subsidised diesel for selected users like goods transport and logistics companies, other users should be charged a higher price.
“With that approach, the government will be able to reduce subsidy leakage and, at the same time, reduce the impact on the price of goods for the people.”
On the same note, he also stressed the need for transparent communication regarding how the savings from fuel subsidy rationalisation will be used.
“The government should communicate a series of measures to transparently utilise the subsidy savings in impactful ways.
“The amount that is saved from the fuel subsidy can be spent in ways that are very easy to understand, also easier to understand by the common people, and also impactful to them.
“This includes communicating transparently about how such savings can be used to equip and improve our healthcare services or build more schools.”
As such, he said the key is the development of a comprehensive implementation mechanism to ensure that rebates and financial aid are effectively channelled to the B40 and M40 groups.
This approach, he asserted, would not only reduce the potential for corruption but also ensure that assistance reaches those in need promptly and efficiently.
