The Federation of Malaysian Consumers Associations (Fomca) said price hikes should not occur as logistics companies would continue to benefit from diesel subsidies.
Under the Subsidised Diesel Control System (SKDS) 2.0 pilot project, nine types of land transportation for goods will receive government subsidies for diesel, including cargo trucks carrying general goods, bottled beverages, refrigerated goods and boxed goods.
“There’s no reason for the transportation sector to transfer any additional costs from diesel prices to consumers because almost all commercial transportation sectors will not be affected (by the diesel subsidy rationalisation).
“However, we can expect some traders to take advantage (of the situation), so this is where the enforcement authorities must monitor the situation to ensure that no profiteering occurs,” Fomca treasurer-general Nur Asyikin Aminuddin told FMT.
“Consumers also play an important role by channelling official complaints to the enforcers to ensure that action can be taken.”
When tabling the 2024 budget, Prime Minister Anwar Ibrahim announced that diesel subsidies would be rationalised in phases in a bid to curb leakage and combat smuggling.
He said there was a possibility of serious smuggling activities due to diesel prices being too low.
In February, domestic trade and cost of living minister Armizan Mohd Ali revealed that Malaysia faced daily losses of RM4.5 million due to three million litres of diesel being smuggled out of the country every day.
Economist Barjoyai Bardai of Universiti Tun Abdul Razak said the RM29 billion expected to be saved from the rationalisation of diesel and petrol subsidies could help Malaysia redirect allocations towards more critical sectors such as education and healthcare.
“This is because these two sectors are highly dependent on the country’s financial performance,” he said.
Bank Muamalat Malaysia Bhd chief economist Afzanizam Abdul Rashid, however, did not rule out the possibility of consumer purchasing power being affected due to people exercising caution in anticipation of rising prices.
“The sudden increase in prices will have a negative impact on the domestic economy and is expected to cause other problems, including weakening business and consumer outlook, which will slow down the recovery and growth of key sectors,” he said.