The Malaysian government is expected to save between RM7.2 billion and RM7.5 billion annually through the rationalization of diesel subsidies, exceeding the initial estimate of RM4 billion.
This positive outcome is due to better management of the subsidy system, according to Finance Minister II Datuk Seri Amir Hamzah Azizan.
Since the initiative was initiated in July 2024, monthly savings of RM600 million have been recorded, adding up to a higher-than-expected annual total.
He also explained that the actual fuel subsidy leakage is worse than expected, especially in Peninsular Malaysia.
Amir Hamzah stressed that the main problem is leakage due to two factors, namely unauthorized commercial use and cross-border smuggling.
By tightening controls, the government has significantly reduced these issues, leading to greater savings.
In addition, the government is working on a new plan to rationalize the RON95 petrol subsidy.
The goal is to implement a two-tier price system that protects 85% of the population from price increases.
The plan includes setting income limits to determine who gets subsidies and using an effective system to manage changes.
