The government has been urged to accelerate the implementation of targeted subsidies for diesel to curb smuggling of the commodity.

On behalf of the Federation of Malaysian Consumers Associations (Fomca), its CEO, Saravanan Thambirajah stated that this measure would guarantee that the benefits are directed to those most in need.

He pointed out that this method eliminates universal subsidies that unintentionally support smugglers, while commenting on a report from the Ministry of Domestic Trade and Consumer Affairs, which anticipates a rise in smuggling incidents this year.

Last month, its Director General Zubir Hamsa reported that, as of March 27 this year, there have been 324 cases involving 3.2 million litres of diesel seized through Op Tiris, valued at RM7.5 million.

On April 1, Prime Minister Anwar Ibrahim said that the removal of diesel subsidies would impact 80% to 85% of the population. He emphasised that targeted subsidy measures would also address long-standing issues of leakage and smuggling, which cost taxpayers billions annually.

“If we make any changes related to diesel, we must ensure that public services, Felda lorries, fishermen, school buses and government departments do not face any increases,” he said.

Removal of subsidies for diesel and RON95 petrol could translate into significant annual savings amounting to billions

This savings can be channelled to the underprivileged through cash handouts to help them defray the higher cost of diesel at the pump. It 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 emphasised that providing financial aid based on data from the Central Database Hub (Padu) would guarantee that these benefits reach their designated recipients, including low-income families and economically vital sectors.

He further noted that this approach would minimise wastage and enhance the efficiency of the subsidy program.

The Malaysian representative at the Washington-based Consumer Choice Centre, Tarmizi Anuwar, also acknowledged that transitioning to a targeted subsidy system would diminish both smuggling and misappropriation. However, steps must also be taken to prevent a distortion of the market that could eventually lead to more illicit activities.

"It's crucial to find a balance between maintaining fair market practices and assisting legitimate users. Determining the most efficient approach to implementing targeted subsidies is paramount," he added. 

Tarmizi suggested that a more efficient method to address diesel smuggling and misappropriation involves implementing a multi-faceted approach, encompassing stricter enforcement, improved border controls, and stiffer penalties for offenders.

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