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Diesel Price Hike Sparks Backlash, Price Increases from Businesses

Image Credit: Malay Mail
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Within just 48 hours of the removal of subsidies from diesel fuel prices, some major suppliers in Malaysia have determined they’ll need to put up their own prices to cover increased logistics costs.

Well, that didn’t take long.

Business owners in Peninsular Malaysia are wasting no time reacting to the sharp diesel price hike to RM3.35 per litre, following the government’s removal of bulk subsidies. Several major suppliers have already announced price increases.

LCS Marketing Sdn Bhd, a supplier of ready-mix concrete, will raise delivery costs by RM12 per cubic metre within a 30-km radius. “For distances exceeding 30 km, additional charges will apply,” the company stated. They cited factors beyond their control as the reason for this increase.

Similarly, Chuan Soon Heng Sdn Bhd, a hardware wholesaler in Kuala Lumpur, announced price hikes due to a 25% increase in transport costs. “After carefully reviewing the increased costs of our transport, shipping, and products, we have to make the difficult decision of increasing the pricing of all products,” the company said.

Public reactions have been, unsurprisingly, largely negative, with many taking to social media to criticize the sudden subsidy removal, which resulted in a 56% price hike overnight. They argue that a gradual implementation would have been more manageable. Prime Minister Anwar Ibrahim and his Pakatan Harapan coalition face scrutiny, given their longstanding promises to lower fuel prices by returning petroleum profits to the people.

More pain at the pump now, but even with the increase in price, Malaysia’s diesel is still cheaper than in neighbouring countries | Image Credit: AP News

According to reports by local media outlet MalaysiaNow, an auto parts dealer in Johor Bahru told them his luck was bad with regard to the timing of the diesel subsidy rationalisation, as his shop had opened only five months ago.

Alif Izuan, 34, said he was now facing increased logistics costs from his suppliers and would need to review the prices of goods in his shop. “We have to charge more because the supplier delivers the goods using a diesel lorry,” he explained.

“We still have stocks of spare parts that we bought earlier this year,” he added, “but the price is higher for the order to be dispatched tomorrow. We have to charge more because the supplier delivers the goods using a diesel lorry.”

He stressed that traders were not raising prices simply to make a quick profit, but rather to maintain previous margins. “If the prices go up, our profit will not increase. If costs go up and prices stay the same, we lose. Nobody does business this way.”

Separately, the government announced that it was considering expanding the diesel subsidies to include additional operators, such as freight transport, school buses, and express buses.


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