Diesel rationalisation can prevent leakage, smuggling, says Fomca

 

About three million litres of diesel is smuggled out of the country daily, causing losses of RM4.5 million per day, according to the domestic trade and cost of living ministry.

PETALING JAYA: The Federation of Malaysian Consumers Associations (Fomca) is confident that steps taken by the government to rationalise diesel subsidies will also help curb leakage and fuel-smuggling.

Its CEO Saravanan Thambirajah said fleet cards which allow eligible commercial vehicle operators to purchase subsidised diesel at designated stations can also help weed out black market operators and fuel-smugglers.

“By targeting these operators and smugglers, we can gradually address the financial losses due to smuggling and leakage,” he told FMT.

In February, domestic trade and cost of living minister Armizan Mohd Ali said three million litres of diesel was being smuggled out of the country daily, causing losses of RM4.5 million per day.

Saravanan did not discount the possibility that smugglers would attempt to manipulate the system given that the subsidy makes diesel cheaper to buy in Malaysia than in neighbouring countries.

Therefore, it is important for the government to increase enforcement, he said.

On May 21, Prime Minister Anwar Ibrahim announced that his Cabinet had agreed to rationalise diesel subsidies. Targeted subsidies will initially be introduced in the peninsula, with plans to extend them to East Malaysia later, he said.

Anwar said the rationalisation exercise in Sabah and Sarawak had to be deferred as many families use diesel-powered transportation on a daily basis.

The targeted diesel subsidy began on Monday, with the new price set at RM3.35 per litre.

Meanwhile, economist Geoffrey Williams said the fleet card system would allow for better monitoring and enforcement to prevent subsidy abuses.

“This will help to cut wastage, leakage and corruption, which is the biggest problem in diesel subsidies,” he said.

Williams also acknowledged that a different approach is needed in Sabah and Sarawak due to the high number of non-commercial diesel users in the two states.

“So the system there will have to be different from the peninsula, where it is mainly targeting commercial users. This will take more time and involve a different system.”

Saravanan urged the government to formulate its rationalisation plan for East Malaysia quickly.

“We hope the government will implement measures soon in Sabah and Sarawak, as smugglers and black market operators from the peninsula will move to these regions to continue their underground activities.” - FMT