The government’s provision of RM200 diesel subsidy for eligible individuals, farmers and smallholders may to a certain extent, constrain the development of the local agriculture sector and consequently, dilute its future potential. 

The targeted diesel subsidy assistance programme is only open to farmers and commodity smallholders with an annual sales of between RM50,000 to RM300,000. However, such limitations prevent medium-sized agricultural enterprises from benefitting, posing obstacles to the development of the local agriculture sector. It is necessary for the government to review these conditions to ensure that more moderately sized agricultural operators may benefit, and thereby promote sustainable growth and innovation in the domestic agriculture industry.

As highlighted by the Federation of Malaysian Vegetable Farmers, small-scale vegetable farmers consume as much as 200 to 400 litres of diesel monthly for transportation and irrigation pumps. At the current diesel price, the RM200 subsidy would be depleted in just four days.

Moreover, small-scale farmers and commodities smallholders may not just own one diesel-run vehicle, and diesel consumption may not only be for transport purposes but also for irrigation pumps.

In addition to the direct impact on agriculture, the implementation of this targeted subsidy programme may also lead to uneven market competition. Industries or businesses which are not included in the subsidy scheme may face challenges of increased transportation costs, affecting their competitive position in the market and potentially lead to market contraction.

At the same time, excluding tourist vans and buses from the subsidy scheme will definitely result with higher costs for operators, and thereby reduce the attractiveness of Malaysia as a tourist destination. In turn, international tourists may be put off and thus choose other countries for travel. This inadvertently will jeopardise the interests of our tourism industry.

The government also needs to address the issue of chain reaction on prices as a result of the withdrawal of diesel subsidies.

Businesses or industries that do not qualify or are excluded from the targeted subsidy scheme would very likely pass on the added costs to consumers, leading to additional price hikes which would further exacerbate the burden on the people's livelihoods.

Therefore, the government needs to carefully evaluate and adjust the targeted subsidy assistance programme to ensure its fairness and effectiveness, in order to minimise negative consequences.

Wong You Fong
Wanita MCA National Chairperson

31 May 2024

-MCA Comm-