Govt urged to implement targeted subsidies, end diesel smuggling

The Domestic Trade and Cost of Living Ministry is expecting an increase of diesel smuggling and diesel misappropriation cases this year, with 324 cases involving 3.2 million liters of fuel being seized through Ops Tiris as of March 27 this year.

Zubir Hamsa, Director-General of the ministry’s Price Control and Anti-Profiteering Section, said that the value of the confiscated diesel amounted to RM7.5 million.

In order to curb the smuggling of diesel, Federation of Malaysian Consumers Associations (FOMCA) CEO, Saravanan Thambirajah urged the government to expedite the introduction of targeted subsidies.

Universal diesel subsidy has benefitted smugglers, said Saravanan

Saravanan also said that targeted subsidies will ensure that the benefits will go to those who need it the most, as opposed to a universal subsidy.

“This approach does away with universal subsidy that has, inadvertently, benefited smugglers,” – Saravanan Thambirajah to Free Malaysia Today

As it happens, the government said during last year’s Budget tabling that taking away subsidies for diesel and RON95 petrol will save them a ton of money, and those savings can then be used to benefit the underprivileged through cash handouts while helping them offset the costs at petrol/diesel pumps.

This will make sure that those in the T20 group as well as the 3.5 million to 4 million foreigners who work and reside in Malaysia do not enjoy the subsidy.

Saravanan further stated that offering financial assistance based on the PADU database will help the intended target groups such as low-income families and sectors vital to the economy receive said assistance.

“This will also reduce wastage and make the subsidy programme more efficient,” – Saravanan to Free Malaysia Today

The Malaysian representative at the Washington-based Consumer Choice Centre, Tarmizi Anuwar, agreed that a targeted subsidy regime will reduce smuggling and misappropriation, but steps must also be taken to prevent a distortion of the market that could lead to more illegal activities.

“It’s essential to strike a balance between ensuring fair market practices and providing support to legitimate users… Identifying the most effective approach to implement targeted subsidies is crucial,” – Tarmizi Anuwar to Free Malaysia Today

Tarmizi said a more effective way would be to adopt a multi-faceted approach that includes stricter enforcement, enhanced border controls and stiffer penalties for offenders.