In response to growing concerns over diesel smuggling, the government has introduced a new subsidy targeting strategy aimed at addressing the significant price disparity between Malaysia and its neighboring countries.
Datuk Abdul Khalib Abdullah (Rompin-PN) questioned the Finance Minister II Datuk Seri Amir Hamzah Azizan on whether the new BUDI MADANI assistance for M40 and B40 diesel vehicle owners is an effective solution to combat cross-border smuggling.
Prior to the subsidy adjustments on June 10, 2024, diesel in Malaysia was priced at RM2.15 per liter, a stark contrast to higher prices in neighboring countries—RM4.24 in Thailand, RM4.44 in Indonesia, and RM8.66 in Singapore.
“This substantial price difference created a lucrative opportunity for smugglers to buy cheap diesel in Malaysia and transport it across borders using modified vehicles with larger fuel tanks,” Amir Hamzah said.
MOF added that the problem of diesel smuggling has been evident, with subsidised diesel consumption rising from 6.1 billion liters in 2019 to 10.8 billion liters in 2023, despite no significant increase in diesel vehicles.
To address this issue, the government has set the retail price of diesel at RM3.35 per liter, reflecting the market price without subsidy. Concurrently, targeted assistance is being provided to B40 and M40 diesel vehicle owners through the BUDI MADANI program.
This initiative includes a monthly cash assistance of RM200, or RM2,400 annually, which is intended to offset the higher costs of diesel for typical users, such as those driving pickup trucks with a daily usage of 75 kilometers.
Amir Hamzah highlighted that initial results suggest that this approach is effective. Diesel sales at petrol stations in Peninsular Malaysia have dropped by over 30% since the implementation of the new pricing, with stations near border areas seeing reductions of 40% to 50%.
“This decrease in sales indicates a reduction in smuggling activities, as the higher market price diminishes the incentive for illegal cross-border transactions,” he said.
In addition to these measures, MOF said that the Ministry of Domestic Trade and Cost of Living (KPDN) will continue to enhance enforcement through operations such as OPS KESAN, OPS CATUT, OPS TERJAH, OPS TIRIS, OPS MENU, OPS PASAR, and OPS SAMAR.
These efforts aim to prevent disruptions in supply and counteract price manipulation.
