The cash assistance from the Budi Madani scheme is expected to cover the increase in diesel prices for vehicles traveling up to 60 kilometres daily.
The Subsidy Is a Means to Avoid Increased Prices of Goods and Services, Said Finance Minister II
The new targeted subsidy initiative from the Malaysian government, Budi Madani, will benefit 700,000 diesel vehicle owners, according to a recent report by Bernama News Agency.
The Malaysian government anticipates savings of RM4 billion (£666.7 million) from the implementation of Budi Madani, which will provide greater fiscal flexibility to enhance the quality of essential public services.
Finance Minister II Datuk Seri Amir Hamzah Azizan noted that the savings from the subsidy could be redirected to critical areas like infrastructure improvements, including roads and schools, as well as healthcare services such as clinics and medicines.
“The savings will be utilized to enhance public services. Without the targeted subsidy, generating these savings would be challenging, making it difficult to improve national services,” he said, as quoted by Bernama News Agency.
“We allocate subsidies to the appropriate sectors, and the savings will be reinvested in infrastructure, education, and other necessary services. This is part of the government’s ongoing efforts,” he elaborated.
Budi Madani encompasses five areas: public transport, fishermen, selected commercial vehicles under the Subsidised Diesel Control System (SKDS 2.0), individuals, and farmers, including smallholders. The targeted subsidy covers 700.000 diesel vehicle owners, around half of the active diesel vehicles in Peninsular Malaysia. Of these, 300,000 are privately owned vehicles, and the rest are commercial vehicles.
Since 2013, the Domestic Trade and Cost of Living Ministry (KPDN) has overseen the governance-related implementation at a special price rate distinct from retail pricing at petrol stations, using SKDS 1.0 with fleet cards issued by oil companies for ten types of public transport vehicles. As of March 7, 2024, the system expanded through SKDS 2.0 Phase 1 to include nine additional types of goods transport vehicles and SKDS 2.0 Phase II further included 14 other types of goods vehicles.
On May 27, the Ministry of Finance announced Budi Madani Subsidy Assistance Programme, which supports private diesel vehicle owners, small farmers, and small commodity farmers. Budi Madani complements existing government efforts to target diesel subsidies through the MySubsidy Diesel system operated by KPDN (SKDS is a component of MySubsidy Diesel).
Under Budi Madani, private diesel vehicle owners, small farmers, and commodity smallholders receive RM200 (£33.34) per month in cash assistance. According to a study by the Department of Statistics Malaysia, this monthly assistance is expected to cover the increase in diesel prices for vehicles traveling up to 60 kilometres daily, meeting the needs of most individual diesel vehicle owners.
Amir Hamzah also urged recipients of subsidized diesel, including those in logistics, hawking, and small trading, to view the government subsidy as a means to avoid increasing the prices of goods and services. “The government, along with KPDN, will continue to intensify efforts to prevent profiteering,” he affirmed.
