The Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) said that diesel subsidy rationalisation based on a targeted approach is a step in the right direction to ensure the fiscal and debt sustainability.

The targeted diesel subsidy rationalisation not only helps to reduce the fiscal deficit, but also benefits the economy as the subsidy savings estimated RM4.0 billion can be rechanneled to the productive sectors such as healthcare, education and public transportation as well as elderly care community services. Additionally, the fuel subsidy rationalization also encourages environmentally sustainable practices.

We welcome the continued subsidies given to public transportation vehicles and goods transport vehicles to help minimise the impact on inflation and business costs, as well as cash aid of RM200 per month to the eligible individuals who own private diesel-powered vehicles, such as small traders and farmers, among others to mitigate the cascading effects of cost pass-through onto households.

The reforms require careful design and considerate execution with ease of administration and transparency to minimise “inclusion and exclusion” errors as well as better enforcement to enhance its effectiveness.

President of ACCCIM, Senator Tan Sri Dato’ Low Kian Chuan said that the subsidy reforms must be sequenced and phased in gradually to avoid a big shock to consumers and businesses. Small price increases are easier to swallow and allow the people and businesses to adapt to the new price situation over time.

We believe that better and clear understanding of the fuel subsidy rationalization can foster a sense of shared responsibility and work towards sustainable fossil fuel policies that benefit the economy and environment.

Senator Tan Sri Dato’ Low said that over time, the fuel and energy subsidy rationalization necessitates SMEs looking for alternative and cleaner sources of energy to optimise their operating costs and maintain competitiveness. The Government can provide tax incentives for SMEs to adopt renewable energy sources and energy-efficient technologies to help reduce reliance on fossil fuels, easing the impact of fuel price fluctuations.