Drop in diesel subsidy expenditure results in RM4bil savings

2026-03-03 - 16:23

The finance ministry said the retargeting of the diesel subsidy also successfully curbed leakages due to smuggling and usage by ineligible business sectors. KUALA LUMPUR: The actual expenditure on diesel subsidies decreased to RM6.2 billion in 2025 compared to RM10.1 billion in 2024, resulting in savings of about RM4 billion. The finance ministry said the savings were achieved through the retargeting of diesel subsidies in Peninsular Malaysia via the subsidised diesel control system (SKDS 2.0), which was implemented from June 10, 2024 until Dec 31, 2025. “The retargeting of the diesel subsidy also successfully curbed leakages due to smuggling and usage by ineligible business sectors, as reflected in the reduction of retail diesel purchases at petrol stations to four billion litres in 2025 compared to seven billion litres in 2024,” the ministry said in a written parliamentary reply. The ministry said this in response to a question from Ahmad Fadhli Shaari (PN-Pasir Mas) who asked about the actual savings generated from the implementation of subsidy rationalisation, including fuel and targeted assistance, and how the funds were redistributed to the people. The finance ministry explained that the savings from the subsidies were returned to those in need while part of the funds was used for socio-economic development and to strengthen a more inclusive social protection network. Among the initiatives are Sumbangan Tunai Rahmah (STR), Sumbangan Asas Rahmah (SARA), which represents the highest allocation ever provided compared to RM8 billion in 2022, and the Early Schooling Assistance Programme (BAP) amounting to nearly RM800 million. Meanwhile, the ministry said over 141,000 companies, involving a total of 368,000 vehicles, have benefitted from the MySubsidi Diesel Programme through SKDS since its launch from June 2024 until January 2026. As for recipients of the BUDI Individu and Budi Agri-Komoditi cash assistance, a total of 344,817 recipients have received distributions amounting to RM1.05 billion. Therefore, maintaining subsidised diesel prices for logistics and public transport vehicles is a strategic step to ensure supply chain costs remain stable. The ministry was responding to a question from Ahmad Marzuk Shaary (PAS-Pengkalan Chepa) who wanted to know about the impact of the diesel subsidy retargeting on transportation costs and food prices, including periodic review mechanisms and targeted compensation to ensure that increased costs are not passed on to consumers.