Diesel subsidy retargeting isn’t an easy policy to defend. Any time the government touches subsidies, people worry. That fear is understandable because the fuel issue is not an abstract matter. It affects work, transport, food prices, school runs, small businesses and daily survival.
The BUDI Diesel scheme shouldn’t be judged by emotion alone, but against the simple reality: Malaysia is trying to keep fuel affordable in a world where supply is unstable, prices are unpredictable; public money cannot be allowed to keep leaking forever.
The first point is price. Malaysia’s subsidised diesel price of RM2.10 per litre works out to about US$0.51 per litre, far cheaper than the US$0.84 per litre in Vietnam, US$1.13 in Thailand, US$1.12 in the Philippines, US$1.19 in Indonesia and US$2.83 in Singapore.
Even unsubsidised, Malaysia’s market diesel price of RM3.97 (US$0.97) per litre is still lower than several regional peers.
