The perception that the government has decided to abolish the diesel subsidy is incorrect. Instead, the subsidy has been retargeted to address the issue of leakage inherent in the previous bulk subsidy approach.
Minister of Domestic Trade and Cost of Living, Datuk Armizan Mohd Ali, clarified that the diesel subsidy is now more precisely targeted through two main methods. The first method involves a retail price subsidy at petrol stations for 33 types of public and goods transportation vehicles via the Subsidised Diesel Control System (SKDS). The second method provides a cash assistance subsidy of RM200 for households with diesel vehicles used for personal or agricultural purposes through the Madani Subsidy Assistance (Budi Madani) program.
"I want to correct the perception that the government intends to abolish the diesel subsidy. We have not abolished it but have instead targeted it through these two methods," Armizan stated during a press conference following the SKDS 2.0 Open Day event.
Earlier, the Ministry of Finance (MOF) announced that the implementation of the Budi Madani program complements the government's ongoing efforts to target diesel subsidies through the MySubsidi Diesel system, managed by the Ministry of Domestic Trade and Cost of Living (KPDN).
The Budi Madani program specifically targets private diesel vehicle owners, including individuals, farmers, and smallholders from the B40 and M40 income groups in Peninsular Malaysia. Meanwhile, the SKDS is designed for 23 types of goods transportation vehicles, providing a mechanism to retarget diesel subsidies effectively.
On the mechanism for targeted diesel subsidies, Armizan noted that this responsibility lies with the MOF, which will announce further details when appropriate.
Regarding diesel prices in Sabah, Sarawak, and Labuan, the minister emphasized that fuel prices would remain unchanged in these areas following the implementation of the targeted subsidy in Peninsular Malaysia.
"Sabah, Sarawak, and Labuan are exempted from this initiative because the government wants to plan carefully and systematically to minimize the impact on the people. Household dependence on diesel in these regions is relatively high due to geographic factors," he explained.
By retargeting subsidies instead of abolishing them, the government aims to address the inefficiencies of the bulk subsidy approach while ensuring that those who need assistance the most receive it. This strategic move is intended to provide more effective and equitable support to diesel users across the country.
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