The government has set the date for the rationalisation of diesel subsidies, according to Economy Minister Rafizi Ramli.
"We have decided on the date and will announce it when the time is right. However, I have emphasised many times that the sequence must be correct. It is about balancing and reducing the risk of knock-on inflation," he said.
Rafizi explained that the government needs to ensure there is no knock-on effect on inflation and supply.
"Sometimes, if you announce the plan early, hoarding happens. People might start stockpiling quickly because they know that in two or three months, diesel prices will rise.
"If we retarget diesel subsidies to manage hoarding and smuggling, announcing a clear date will cause a spike in smuggling early on," he said after officiating the Oil and Gas Services & Equipment (OGSE) Census 2024 themed Driving the Future of Energy here, yesterday.
Rafizi said that although some may question why the government does not take more drastic action to prevent leakages, it is impossible with only about 2,500 enforcement officers.
On May 27, the Finance Ministry announced a diesel subsidy aid program, allocating RM200 monthly for eligible individuals and smallholders in the agriculture and commodity sectors.
The Ministry of Finance said as of June 6, 2024, more than 30,000 individuals, farmers, and small-scale commodity growers have been approved to receive cash subsidies under the BUDI MADANI initiative.
Meanwhile, Rafizi said that the targeted subsidy plan for RON95 is still on track.
"Our most important parameter is our deficit target, which is set at 4.3 per cent this year.
"Therefore, subsidy retargeting is a key lever towards achieving this goal. The specifics of timing depend on the financial details. We are guided by these considerations," he added.
Rafizi called on the equipment and oil and gas services sectors to collaborate in order to ensure that Malaysia does not lag behind other countries in terms of enhancing its energy potential.