KOTA BARU: The Malaysia Malay Contractors Association (PKMM) has expressed concern that the diesel subsidy rationalisation, with the pump price set at RM3.35 per litre today, will result in price increases for consumer and construction products.
Its president Datuk Mohd Rosdi Ab Aziz said the government's decision to focus on targeted subsidies as an immediate countermeasure to address the increase in the cost of living is not a complete solution.
"The Madani government is willing to take this step, which is not a popular decision among the people, by withdrawing the full diesel subsidy that has been enjoyed by everyone for a long time.
"In other words, the burden is now shifted to the people; that is the reality.
"The reality of the country's economic management by the government and the reality of the people managing their personal and family finances will be affected by the increase in the cost of living due to the elimination of subsidies.
"The countermeasure taken by the government to address the increase in the cost of living, especially for the B40, is not a complete solution because, in the market, price increases will happen for all consumer and construction products.
"What is clear is that there will be a double increase in the price of essential or important goods, whether due to an increase in transportation costs, production costs, or an increase created by traders who take the opportunity to make a profit," he said.
Mohd Rosdi said when the government has decided on the policy, what else can be done by the people and consumers, including contractors in the construction sector.
"What is important now is that people need to be ready to continue life with new demands and the situation of managing the country's economy with a new approach. Moreover, people need to learn to live without government subsidies considering various future factors," he added.
He said the association hopes the government will increase its efforts through new, serious, and high-impact policies to stimulate and activate the national economic cycle, so that the people's income would be higher.
"The real solution to the inevitable increase in the cost of living is to multiply people's income. It must be remembered that any increase in the price of goods will ultimately be borne by consumers or the people.
"Moreover, the government's subsidies are no longer an obstacle to the increase in the price of goods when targeted subsidies become a government practice, especially when they are discontinued.
"The construction sector will be burdened by rising construction costs, particularly for ongoing projects.
"We are very worried that projects will become 'sick projects' due to contractors' inability to absorb the increase in the cost of construction materials and other expenses," he added.
Yesterday, Finance Minister II Datuk Seri Amir Hamzah Azizan announced diesel subsidies for certain groups in Peninsular Malaysia would be discontinued starting at 12am today (June 10).
This, he said, will set the price of diesel at RM3.35 per litre according to the automated pricing mechanism, up from the current price of about RM2.15 per litre. He stated that this follows the unsubsidised market price based on the average for May 2024, according to the automatic pricing mechanism formula.
To cushion the impact of the new price of diesel, the government has introduced the Budi Madani individual and Budi Madani Agri-commodity cash aid programmes, where around 30,000 recipients will get RM200 in their respective accounts from June 10 midnight.
Amir said this group, some 80 per cent of diesel users, comprised individuals and small commodity owners who have been approved to receive cash subsidies under the Budi Madani initiative.
Besides that, the government has also introduced fleet cards under the Subsidised Diesel Regulation System (SKDS) for public transport companies and those transporting goods. This is to enable cash refund claims of diesel to be made with the Finance Ministry in accordance with the application procedure to be announced later.
A total of 33 types of public and goods transport vehicles will continue to enjoy subsidised diesel through the use of fleet cards under SKDS.
Amir said the government would continue to monitor the situation to avoid price instability. He assured that the decision to implement targeted subsidies for diesel "was not rushed" and that the government, through relevant ministries and agencies, has given special attention to studying and ensuring the best mechanism to protect the sectors and individuals eligible for assistance, so that economic activities are not disrupted.
He also said the government would continue to monitor the situation to avoid price instability. He assured that the decision to implement targeted subsidies for diesel "was not rushed" and that the government, through relevant ministries and agencies, has given special attention to studying and ensuring the best mechanism to protect the sectors and individuals eligible for assistance, so that economic activities are not disrupted.