Malaysia to cut diesel subsidies, saving $852m annually

KUALA LUMPUR: Malaysia will begin cutting fuel subsidies to bolster its fiscal position starting with diesel, a move that will save about 4 billion ringgit ($852 million) annually, Prime Minister Anwar Ibrahim said on Tuesday.

Anwar has repeatedly vowed to shift away from blanket subsidies to a targeted system that mainly aids low-income groups.

Malaysia subsidises fuel, cooking oil, and rice, among other items, but rising commodity prices have seen that expense climb in recent years, straining the government’s coffers.

Anwar said savings from subsidy cuts could be re-directed to the needy, including cash assistance to eligible owners of diesel vehicles such as paddy farmers and small traders.

“I caution that any targeted subsidy should not burden the majority of the people,” Anwar said in a televised address. The diesel subsidy reform will only involve consumers in peninsular Malaysia, he said.