KUALA LUMPUR: The government is optimistic that the implementation of diesel subsidy rationalisation will allow Malaysia to achieve its targeted inflation rate and economic growth.
Finance Minister II Datuk Seri Amir Hamzah Azizan said the government's projection for the inflation rate this year was between 2 per cent and 3.5 per cent, while the gross domestic product (GDP) growth rate is expected to be between 4 and 5 per cent.
"The implementation of diesel subsidy rationalisation, which involves providing subsidised diesel to the logistics sector and monthly cash assistance to individuals, will reduce pressure on consumer goods prices and the impact on the public.
"Hence, even though there are significant changes in retail diesel prices, it is expected that this will not affect economic performance or the inflation rate," he said in the Dewan Rakyat today.
He added that the government also expected to achieve annual savings of RM4 billion with the rationalisation of subsidies.
These savings, he said, will be utilised to improve the quality of life for the people through the provision of quality public infrastructure and more comprehensive social protection.
"This also means that although the government has taken steps to target subsidies to reduce leakages and smuggling, those in need will continue to receive assistance and diesel subsidies.
"However, it should be noted that the government still bears up to RM10 billion for diesel subsidies despite saving RM4 billion a year.
"This amount includes subsidies given to Sabah and Sarawak (RM3 billion), subsidies for the public transportation and logistics sectors in Peninsular Malaysia (RM4 billion), cash assistance for individual diesel vehicle owners and agro-commodity smallholders (RM2 billion), and subsidies for fishermen (RM1 billion)."