Malaysian Drivers Unamused by Steep Overnight Rise in Diesel Prices

A local man filling up his tank at a station in Kuala Lumpur | Image Credit: AFP
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While some may be taking it in their stride, it’s clear the dramatic increase in diesel prices has many local drivers fuming.

Plenty of Malaysian drivers expressed outrage on Monday after diesel prices surged more than 50% overnight. The government slashed subsidies, pushing the price from RM2.15 to RM3.35 per litre. This move was largely aimed to curb rampant fuel smuggling into Thailand, which cost the government RM4 billion annually. However, Sabah and Sarawak were exempt from this price hike.

Civil servant Hanif Abdul Razak is now considering selling his seven-seater SUV due to the rising costs. “I’m not ‘uber rich’,” he shared, emphasizing the need for comfort and safety for his family of six.

Prime Minister Anwar Ibrahim announced the subsidy cut on May 22, targeting the “uber rich and foreigners” benefiting from subsidized diesel. To alleviate the impact, the government is providing a RM200 monthly handout to 30,000 eligible Malaysians, but the conditions exclude many middle-income drivers, as their vehicle must be at least 10 years old and worth less than RM100,000.

Additionally, some of the exempted operators, such as goods and public transport companies, have not received their fleet cards yet, and it’s unclear exactly when that will happen. They will not receive the lower price at the pump without the card, so operators have been advised to “save their receipts” and claim rebates back from the Finance Ministry. Critics have noted that getting everything sorted prior to the price hike would have been preferable – and far more efficient than shifting the burden of seeking rebates after the fact to the people.

Property investor Ihsan Zainal highlighted his increased fuel bill from RM1,653 to RM2,576 monthly for 769 litres of diesel. “Even if eligible, it’s just 200 ringgit,” he said. “The difference is almost 1,000 ringgit. To whom do I claim? My clients?”

The subsidy cut aims to save the government significant funds and reduce diesel smuggling into Thailand. Second Finance Minister Amir Hamzah Azizan stressed the need to redirect funds to improve citizens’ quality of life and national development. Diesel prices will be set weekly in Peninsular Malaysia, while Sabah and Sarawak will continue to enjoy subsidies.

Opposition PAS party politician Shahir Sulaiman warned of inflationary pressures on goods and services, emphasizing the need for enforcement to control prices and prevent profiteering. Similarly, UMNO Youth called for a more reasonable plan that would see prices rise gradually.

A Hong Leong Investment Bank study found that removing fuel subsidies could save the government RM29 billion but at a 64% increase in fuel costs for the public, which critics say would potentially lead to crippling inflation.

It’s also worth noting that a recent study showed that Malaysia had lost at least RM277 billion to graft over the past five years, suggesting that corruption is an even greater problem for the country than subsidies.

Anwar acknowledged the challenges, stating, “I concede that things need to be done, but it needs to be done judiciously. Because in no way will I punish the masses.”


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