Malaysian pump diesel sales drop 30% after subsidy cut, reflecting previous abuses

Malaysia has seen a massive drop of 30 per cent in pump sales of diesel in the week after subsidies for the fuel were cut on June 10, in a clear sign that the subsidies borne by taxpayers had been abused for years.

- Shannon Teoh

While retail sales of diesel at refuelling stations dropped by eight million litres daily, the purchase of commercial diesel has risen by four million litres daily. Commercial diesel is sold at market price and meant for use at construction sites and plantations, as well as to power generator sets.

“This gives an indication that some of the subsidised retail diesel have for long before this been used by industrial sectors that should have purchased at market prices. This trend... is a positive sign that leakages of diesel subsidies have shrunk,” Second Finance Minister Amir Hamzah Azizan told Parliament on June 24.

Prime Minister Anwar Ibrahim had said earlier in June that “the main goal of the diesel subsidy rationalisation policy is to ensure that subsidy wastage no longer continues, while ensuring that the savings are returned to the wider population”.