Kuala lumpur: The implementation of the BUDI MADANI Diesel (BUDI Diesel) initiative, which provides diesel at RM2.10 per litre through the MyKad verification mechanism from July 1, is expected to reduce subsidy leakages while ensuring government assistance reaches those who genuinely need it. Putra Business School (PBS) economic analyst Associate Professor Dr Ahmed Razman Abdul Latiff said a targeted subsidy mechanism is more sustainable than blanket subsidies as it enables the government to channel assistance more accurately to eligible groups.
According to BERNAMA News Agency, Dr Ahmed Razman explained that those who depend on diesel for work or business, including operators of diesel-powered machinery and equipment, can benefit from lower operating costs through this targeted price subsidy approach. He noted that while targeted fuel subsidies serve a different purpose from direct cash assistance, they help contain production, logistics, and transportation costs. However, he emphasized the importance of accurate recipient data and technological support for the distribution system, particularly in rural areas with limited internet connectivity.
He further mentioned that a continuously updated database of eligible recipients and a transparent feedback and appeal mechanism are crucial for the success of the BUDI Diesel initiative. Targeted subsidies could ease the government's fiscal burden by limiting benefits to eligible recipients and preventing higher-income groups and foreign nationals from enjoying subsidized fuel. The savings generated from this initiative could be redirected to sectors such as education, healthcare, public transport, and infrastructure, contributing to controlled inflation and a more manageable cost of living.
Meanwhile, Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid described the use of MyKad as a systematic and proven verification mechanism for subsidy distribution. He pointed out that the mechanism's successful implementation for RON95 fuel indicates potential savings of about RM2 billion for diesel, ensuring a more targeted and efficient subsidy distribution. Efforts to curb fuel smuggling and subsidy abuse would enable the government to manage subsidy expenditure more effectively.
Dr Mohd Afzanizam also suggested that stable fuel prices and economic growth could eventually lead to subsidies based on income levels, further reducing future fuel subsidy expenditure. He emphasized that fuel subsidies should be seen as a temporary measure and advocated for accelerating the transition to electric vehicles (EVs) as part of Malaysia's green mobility agenda. This transition would require expanding charging infrastructure and developing fast-charging technology to address range anxiety.
In addition, the Muslim Consumers Association of Malaysia (PPIM) urged the Ministry of Domestic Trade and Cost of Living (KPDN) to strengthen enforcement to prevent traders from exploiting the BUDI Diesel initiative by imposing unjustified price increases. Its chief activist, Datuk Nadzim Johan, warned that changes in fuel prices often trigger a chain reaction, increasing the prices of goods and services, which burdens consumers. He encouraged consumers to report unreasonable price increases with evidence such as purchase receipts and location.
Datuk Nadzim also called for tighter controls on imported products to protect local producers and recommended policies to reduce food waste, including promoting the use of retort packaging technology to enhance the country's food security.