PUTRAJAYA: The price of diesel at all retail stations in the Peninsula is set at RM3.35 per litre effective 12.01 am on Monday (June 10), which is the unsubsidised market price based on the May 2024 average according to the Automatic Pricing Mechanism formula.

Finance Minister II Datuk Seri Amir Hamzah Azizan said the fixed price and implementation of targeted diesel subsidy would see the government save RM4 billion per year, besides strengthening the country’s financial position in the long run.

“The targeted subsidy decision (by the government) is not an easy step, but one that has been given particlar attention.

“We want to curb the leakages, which have resulted in a loss for the people and the country. We have suffered huge losses yearly and that can impede the country’s economy,” he told a media conference here today.

Prime Minister Datuk Seri Anwar Ibrahim, in his National Address on May 21, stated the Cabinet had agreed to implement the targeted subsidy for diesel, thus saving the government about RM4 billion annually.

However, the targeted subsidy does not affect consumers in Sabah and Sarawak.

Amir Hamzah said that for the following periods, the diesel price will be announced every week according to the current practice of the Ministry of Finance and the government will continue to monitor the current situation to avoid price instability.

He said diesel subsidy had increased 10-fold from RM1.4 billion in 2019 to over RM14.3 billion in 2023.

On the diesel subsidy landscape in Malaysia, he said that at present, with the huge amount spent on diesel subsidy by the government, the diesel retail price in Malaysia is among the lowest in the world.

For the record, diesel is sold at four different prices in Malaysia according to subsidy, namely RM1.65 for fishermen; RM1.88 for land public transport; RM2.15 for commercial and private vehicles; and unsubsidised market price for the commercial sector which reached RM3.60 earlier this year.

“At the same time, it is priced higher in neighbouring countries, about RM4 in Thailand, RM4.50 in Indonesia and almost RM9 in Singapore. This situation invites smuggling to neighbouring countries and misappropriation in commercial sectors that are not eligible to use subsidised diesel,“ he said.

Amir Hamzah also reiterated that the amount the goverment saved would ensure more resources could be channelled to other critical sectors which will directly improve the people’s quality of life, including public infrastructure, healthcare and education.

As such, he said that through the targeted subsidy, smuggling and misappropriation of diesel would no longer be lucrative activities, which could then, logically, be reduced drastically.

“I want to emphasise that what the government is doing today is re-target the subsidy to those who are eligible only. We want to stop the leakages which have resulted in a loss for the people and the country.

“Every year, we suffer huge losses and this can hamper the prosperity we deserve. This is a government decision to strengthen the country’s long-term financial position,” he said.