In June, the Malaysian government implemented diesel subsidy rationalisation as part of its efforts to curb rampant leakages.
However, the move appears to have had negative repercussions for petrol station operators in Peninsular Malaysia, who claim to have incurred losses amounting to RM181 million since its implementation.
According to Bumiputera Petrol Station Operators Association of Malaysia (Bumipeda) honorary secretary Hanny Julia Haron, nearly 3,500 petrol stations are now at a critical level, having sustained losses almost every month.
She added that the situation arose as operators were forced to purchase fuel at high prices and sell it at lower prices.
“About 98.3 per cent of these stations have reported losses from petrol and diesel sales, causing many operators to shift towards convenience store sales as a strategy to offset the decline in fuel revenue.
“Without intervention, the long-term economic impact could be severe, potentially increasing unemployment rates and reducing government revenue from taxes and levies due to the closure of stations or a reduction in operations,” she stated.
Earlier this month, Deputy Finance Minister Lim Hui Ying revealed that the targeted diesel subsidy initiated in June this year has allowed the government to generate savings of RM600 million per month.
The government has been urged to implement the targeting of RON95 petrol subsidies based on vehicle type rather than household or individual income.
According to Universiti Kebangsaan Malaysia’s Malaysian Inclusive Development and Advancement Institute (Minda-UKM) director, Professor Tan Sri Dr Noor Azlan Ghazali, the concept is similar to vehicle classification for toll payments on highways.
He further added that, in the context of petrol subsidies, the classification should be based on vehicle engine capacity.
“It is common for those with low incomes to use motorcycles as their daily transport, while wealthier individuals tend to use vehicles with larger engine capacities.
“If a wealthy person uses a Perodua Kancil, they should qualify for the subsidy because they consume less fuel.
“Of course, there will be some leakage in every classification, but it can be minimised,” he said at a special press conference on the 2025 Budget on Thursday.
Prime Minister Datuk Seri Anwar Ibrahim, announced in the 2025 Budget on Friday that the targeting of RON95 petrol subsidies is expected to be introduced by mid-2025.
Additionally, he stated that the government is advised to assist the underprivileged through alternative methods without disturbing market prices.
“I prefer to maintain market prices, and we cannot live in a state of denial.
“If we continue to suppress prices at a low level for an extended period, it will create a burden.
“If a war occurs in the Gulf countries, it will certainly lead to an increase in petrol prices; the public needs to be informed, and the government must provide assistance through alternative methods without interfering with market prices,” he said.
The government’s fuel subsidy rationalisation, which kicked off with diesel early last month, has its plus points. First, the courageous but unpopular move can ensure that more eligible groups can benefit from the subsidy.
On top of that, the savings from subsidy rationalisation can also be reinvested into improving the quality of services and facilities needed by the rakyat.
Thirdly, with a substantial price increase, drivers (especially those no longer eligible for subsidies) have no choice but to be a little gentler with the throttle in order to reduce fuel consumption.
To help you cope with the removal of fuel subsidy, here are eight simples tips on how to save fuel:
1. Make sure there’s enough air in the tyres
Low tyre pressure causes higher rolling resistance, which leads to the car feeling heavier and increased friction.
2. Remove items from the boot
Why drive around with excess weight in the boot? Remember, the heavier the vehicle is, the more fuel it uses to get moving. Unless it’s man’s best friend.
3. Just turn on the AC
Yes, turning on the air-conditioning while driving slightly increases fuel consumption. But so does rolling the windows down when moving at speeds of 80 km/h and above – the resulting wind resistance affects aerodynamics, ultimately impacting fuel usage.
4. Turn off the engine during extended stops
Don’t let the engine idle for more than a few minutes. You may not be going anywhere but your engine is burning precious fuel every second.
5. Accelerate wisely
When you’re on the road, there’s no need to accelerate aggressively because you are not impressing anyone. Press the accelerator gently but steadily for the most fuel-efficient acceleration.
6. Cruise in the highest gear
If you’re cruising on the highway, ensure your car is in the highest gear especially if you drive a manual as an automatic gearbox does this by itself. This will make the engine run at the most optimum RPM for the best fuel usage.
7. Plan your journey in advance
Not only does a well-planned journey reduce your stress but also it lessens the strain on the powertrain, thus saving fuel.
8. Maintain your car regularly
Dirty air filters and worn spark plugs are just some of the things that make it difficult for the engine to operate at its optimum level.
THE policy paper for the rationalization of subsidies for RON95 petrol has not yet been brought to the cabinet for implementation. This was stated by the Prime Minister, Datuk Seri Anwar Ibrahim.
He mentioned that the re-targeting of subsidies for this purpose would not be implemented in the near future.
“There is no policy paper that can lead us to implement it (the rationalization of RON95 subsidies) quickly. There have been studies all along, but we think it’s better to first observe the steps taken regarding electricity and diesel subsidies,” he said in the Parliament yesterday.
He responded to an additional question from Ahmad Fadhli Shaari (PN-Pasir Mas) who wanted to know if the government intended to implement the re-targeting of RON95 petrol subsidies.
Anwar, however, stated that in his opinion, the re-targeting of RON95 petrol subsidies should have been implemented long ago, but he was aware of various constraints that made it difficult to reinstate the subsidies for the fuel.
“If you ask me, re-targeting RON95 subsidies should have been done a long time ago. But this is not easy, as the problem we face is that 3.8 million foreigners are using this oil, just as the wealthy are. This is something that is crucial and important for us to halt,” he added.
He also criticized the opposition’s statement for continuously “manipulating” the issue of re-targeting diesel subsidies, claiming that it burdens the people.
“Until now, there are still those who are ‘riding’ on the issue with various accusations of the government being oppressive and claiming that subsidies have been completely withdrawn.
“Is the re-targeting of these subsidies a wise decision for the economy? All (Members of Parliament) agree, even though they expressed disagreement during the campaign.
“When (the previous government) was in power, they also said that (re-targeting diesel subsidies) was necessary, but because they knew it would heat up the political temperature (it was not implemented).
“However, I acknowledge that the implementation aspect can be disputed. I accept this, but what we are hearing now is only the accusation of an oppressive government, cutting subsidies and repeating the campaign (in the past), today in power, tomorrow oil prices will drop,” he said.
ROUGHLY 180,000 commercial vehicles have not yet applied for the Fleet Card through the Subsidized Diesel Control System 2.0 (SKDS 2.0).
Deputy Minister of Domestic Trade and Consumer Affairs, Fuziah Salleh, stated that according to records, there are 389,000 registered commercial vehicles with the Road Transport Department (JPJ), but only 209,000 have applied for the Fleet Card in the SKDS 2.0.
“The total of 209,000 has been approved for diesel subsidy,” she said when approached by reporters. She explained that there are 33 vehicle categories, including 10 categories of public transportation such as school buses and express buses, while the remaining 23 categories involve vehicles for goods transportation and logistics.
“In the goods transportation category, there are 389,000 registered with JPJ, but only about 209,000 have registered to get the Fleet Card, meaning roughly another 180,000 have yet to register.
“Perhaps those who have not registered think they are not eligible or only have one or two vehicles and find it difficult.
“Actually, even one, two, or three vehicles are eligible, no need to have 20 vehicles in a company. As long as they fall under the 23 categories of listed goods transportation vehicles,” she advised applicants in those 23 categories not to worry as those who apply will qualify immediately.
She gave an example, if the Fleet Card application from five oil companies takes time to process, the applicant can keep the receipt and then receive a refund.
“When you have a Fleet Card, discounts are immediately available at the gas station,” she said.
Regarding claims that the RM200 subsidy is insufficient for commercial vehicles, Fuziah stated that no Fleet Card quota has been set for goods transportation vehicles so far.
“The targeting of diesel subsidies under the Ministry of Domestic Trade and Consumer Affairs is for companies and we use the Fleet Card system. It’s different from the other two,” she said referring to the Budi Individu or Budi Agri-Commodity system.
THE Ministry of Transport describes the increase in school bus fares as unwarranted, considering that the Subsidized Diesel Control System (SKDS) 1.0 for land public transport vehicles remains at a price of RM1.88 per liter.
The Minister, Anthony Loke, emphasized that this decision also applies to express bus operators who cannot arbitrarily raise fare rates as such actions require approval from the Land Public Transport Agency (APAD).
“This should not happen because this diesel subsidy is still being given to express bus and school bus operators. This means they are not affected by diesel price hikes as they are already receiving subsidies and there is no change in that aspect. So why are they motivated to raise prices if the issue of diesel (price hikes) is being used as a reason to raise prices,” he told reporters yesterday.
Loke suggested that although the government does not control school bus fare rates, operators should hold discussions with the Parent-Teacher Association (PIBG), with the ministry ready to assist from various angles to ease the burden on those involved.
“We encourage discussions between operators and PIBG… I know there are constraints and challenges they face, and we try to help from various perspectives to ease their burden,” he said.
Previously, there were rumors of possible fare increases for express buses, school buses, and excursion buses following the announcement of the diesel price hike in the Peninsula from RM2.15 per liter to RM3.35, which took effect two days ago.
Premier of Sarawak, Tan Sri Abang Johari Tun Openg, suggested that the federal government should seek and explore cheap and sustainable alternative energy sources to replace the use of diesel throughout Malaysia.
He said that this long-term effort would also eliminate the need for the diesel subsidy borne by the country.
Abang Johari. Photo by: Malay Mail
“If people still use diesel and ask for subsidies, when the prices go up, they will ask for more… so why not have alternative energy so there won’t be a need to use diesel,” he said in a press conference yesterday.
Abang Johari said, for example, the government could explore the use of emerging energy sources like hydrogen, which is being actively implemented by the Sarawak government.
On Sunday, Second Finance Minister, Datuk Seri Amir Hamzah Azizan, announced that the price of diesel at all retail stations in Peninsular Malaysia was set at RM3.35 per liter, the market price without subsidies, starting from 12.01 am on Monday.
Under “Budi Madani,” a cash assistance of RM200 per month is provided to private diesel vehicle owners, small-scale farmers, and small-scale commodity growers.
Registration for Budi Madani opened on May 28 following the discontinuation of diesel subsidies, and 30,000 diesel vehicle owners will receive the assistance starting today.
THE government has set the retail price of diesel fuel at RM3.35 per liter starting from midnight tonight (June 10, 2024).
According to the Second Finance Minister, YB Senator Datuk Seri Amir Hamzah Azizan, the new price will be enforced at all petrol stations across Peninsular Malaysia. The retail price of diesel fuel in Sabah, Sarawak, and Labuan will remain at RM2.15 per liter.
Through the implementation of diesel subsidy targeting, the government has set the diesel prices for eligible sectors as follows:
Subsidized Diesel Control System (SKDS) 2.0 using fleet card method for logistic vehicles, set at RM2.15 per liter
Subsidized Diesel Control System (SKDS) 1.0 for public land transport vehicles including school buses, express buses, ambulances, and fire engines at RM1.88 per liter
Subsidized diesel for fishermen remains at RM1.65 per liter
The subsidy targeting is introduced in the form of cash assistance through the following initiatives:
Individual BUDI Cash Assistance of RM200 per month for citizens who own private diesel vehicles
Agri-Commodity BUDI Cash Assistance of RM200 per month for small-scale farmers and commodity smallholders
It is understood that the first group of over 30,000 recipients will benefit from Individual BUDI and Agri-Commodity BUDI assistance starting tomorrow (June 10, 2024).
Application for the Subsidy Assistance Program BUDI MADANI, involving private diesel vehicle owners, small farmers, and small commodity planters, will open today (May 28, 2024).
Qualified recipients will receive BUDI MADANI assistance of RM200 per month in line with the implementation of diesel subsidy distribution.
Second Finance Minister, Senator Datuk Seri Amir Hamzah Azizan said, private diesel vehicle owners meeting specific eligibility criteria can apply under the BUDI Individual category.
While small farmers and small planters can apply under the BUDI Agri-Commodity category.
“The follow-up implementation statement to the Prime Minister’s National Address by Datuk Seri Anwar Ibrahim last week regarding the Cabinet’s decision to implement diesel fuel subsidy distribution involving consumers in Peninsular Malaysia,” he said in a statement.
For the BUDI Individual category, applicants must be Malaysian citizens, own registered private diesel vehicles with the Road Transport Department besides luxury vehicles under 10 years old.
The owned vehicles must have active road tax and individual or spouse annual income of RM100,000 and below.
As for the BUDI Agri-Commodity category, applicants must be registered as small farmers or planters with relevant agencies under the Ministry of Agriculture and Food Security (KPKM) or the Ministry of Agriculture and Commodities (KPK).
Applicants should be active commodity small farmers or planters with annual agricultural sales between RM50,000 and RM300,000.
“Each application received will be cross-checked with data under the Inland Revenue Board of Malaysia (LHDNM) to exclude luxury vehicle owners under 10 years old and high-income individuals (T20),” he said.
Applications can be made online at the website https://budimadani.gov.my, which will be open throughout the year.
For applications made and approved before June 3, the first BUDI MADANI will be received by mid-June, with subsequent assistance distributed monthly.
While for applications approved after June 3, the first BUDI MADANI will be received within two weeks and subsequently on a monthly basis.
BUDI MADANI will be credited to the recipient’s bank account every month, while recipients without bank accounts can claim BUDI MADANI in cash at any National Savings Bank (BSN) branch across Peninsular Malaysia.
Amir Hamzah said that the BUDI MADANI Program complements the Government’s existing efforts in targeting diesel subsidies through the MySubsidi Diesel system managed by the Ministry of Domestic Trade and Consumer Affairs.
So far, nearly 90,000 fleet cards have been issued to companies in the public land transport sector and the land freight transport sector.
“As frequently emphasized by the Prime Minister, diesel subsidy distribution is among the fiscal reform measures under the MADANI Economic framework, to build Government financial sustainability and enhance Malaysia’s competitiveness.
“The BUDI MADANI initiative reflects the integrated efforts of the MADANI Government machinery to ensure that the diesel subsidy distribution mechanism is comprehensive, efficient, and effective, so that the logistics sector and the majority of the people are continuously protected,” he added.
For more information and to apply for the BUDI MADANI eligibility requirements, visit https://budimadani.gov.my.
Applicants can also contact the BUDI MADANI assistance hotline at 1-800-88-2747 / 03-8882 4565 / 03-8882 4566 or via email at budimadani@treasury.gov.my.
Further inquiries and information can also be obtained at all Inland Revenue Board offices across Peninsular Malaysia.
A pilot project to test the MySubsidi Diesel system of the Ministry of Domestic Trade and Cost of Living (KPDN) and the Fleet Card system of petrol companies through six selected goods transport companies will be implemented with effect from February 1.
Its minister Datuk Armizan Mohd Ali said the implementation of the pilot project was for the expansion of granting subsidised diesel quotas to the land transport (goods) sector through the Subsidised Diesel Control System 2.0 (SKDS 2.0).
The six companies are Perceptive Logistic Sdn Bhd, Multimodal Freight Sdn Bhd, Mun Chuen Transport Sdn Bhd, Tan Swee Hee Sdn Bhd, Sim Yew Enterprise Sdn Bhd and Rantau Panjang Haulage Sdn Bhd which were selected after their Skid Tank quotas expire this month.
“An engagement session was held to give exposure to pilot companies and petrol companies about the guidelines to apply for quotas and reporting under MySubsidi Diesel System and the Fleet Card system,” he said during a press conference.
Earlier Armizan made a working visit to review the preparations of Syarikat Perceptive Logistics for the implementation of the pilot project in Port Klang.
He explained that SKDS is currently given through two channels, namely Skid Tank which involves manual application and processing and Fleet Card which uses the MySubsidi Diesel KPDN system.
“At this point, only the land transport sector (public) uses the Fleet Card channel while the goods transport sector (land), river passenger boats as well as ferries and boats to the main island still use the Skid Tank channel,” he said.
He said the use of Fleet Card can reduce the offence of misappropriation and smuggling of subsidised diesel since the system will be digitally monitored by KPDN and oil companies while Skid Tank only involves reporting by the companies involved.
“KPDN will continue to monitor the implementation of this pilot project and get feedback from the industry to ensure the effectiveness of the implementation of the system which is expected to be implemented in the second quarter of this year,” he said
Malaysia’s Leading Automotive News | ENGEAR ENGLISH
