Put targeted subsidy plan in place quickly to combat diesel smuggling, govt urged

Consumer group Fomca says introducing targeted subsidies will curb smuggling. (Bernama pic)

PETALING JAYA: The government has been urged to expedite the introduction of targeted subsidies for diesel to curb smuggling of the commodity.

Apart from that, Federation of Malaysian Consumers Associations (Fomca) CEO Saravanan Thambirajah said, it will ensure that the benefits derived will reach the people who need help most.

“This approach does away with universal subsidy that has, inadvertently, benefited smugglers,” he told FMT.

He was commenting on a report citing the domestic trade and cost of living ministry as saying that a rise in the incidence of smuggling is expected this year.

Its director-general Zubir Hamsa said last month that there has been 324 cases involving 3.2 million litres of diesel as of March 27 this year. The value of the diesel, seized through Op Tiris, is valued at RM7.5 million.

On April 1, Prime Minister Anwar Ibrahim said 80% to 85% of the population will be affected when subsidies for diesel is removed.

On the other hand, he said, the move will lead to an end to leakages and smuggling, a problem that has persisted for years, costing taxpayers tens of billions of ringgit annually.

When tabling Budget 2024 in October last year, the government said the removal of subsidies for diesel and RON95 petrol could lead to billions in savings each year.

The savings will be directed to the underprivileged through cash handouts to help them defray the higher cost of diesel at the pump.

This will also ensure that those in the T20 group, the richest Malaysians, as well as the 3.5 million to four million foreigners who work and reside in the country, do not enjoy the subsidy.

Saravanan said that offering financial assistance based on data on the Central Database Hub (Padu) will ensure that such benefits reach the intended target groups such as low-income families and sectors that are vital for the economy.

“This will also reduce wastage and make the subsidy programme more efficient,” he added.

The Malaysian representative at the Washington-based Consumer Choice Centre, Tarmizi Anuwar, also acknowledged that moving to a targeted subsidy regime will reduce smuggling and misappropriation.

However, he said, steps must also be taken to prevent a distortion of the market that could eventually lead to more illicit activities.

“It’s essential to strike a balance between ensuring fair market practices and providing support to legitimate users,” he told FMT.

“Identifying the most effective approach to implement targeted subsidies is crucial,” he added.

Tarmizi said a more effective way to curb diesel smuggling and misappropriation is to adopt a multi-faceted approach that includes stricter enforcement, enhanced border controls and stiffer penalties for offenders.