KUALA LUMPUR: The Malaysian Institute of Economic Research (MIER) today said it supports the government policy to reduce or withdraw subsidy on diesel as it can significantly reduce price differential at border areas.
On Monday, the government rationalised its diesel subsidy scheme and set the pump price at RM3.35 a litre.
To cushion the blow, the government has offered fleet cards with subsidised prices for transportation and agri-commodity smallholders and monthly cash aid for individual diesel vehicle owners.
In a statement today it said the move will also help bring illegal activities such as smuggling under control.
The policy will also reduce the cost of enforcement along the border areas.
MIER added that the policy to reduce or do away with the subsidy will create industries and businesses based on the true production costs and not based on subsidised prices which have been the case for many years.