MyKad-Based Diesel Subsidy Expected to Save Up to One Billion Litres a Year, Says Amir Hamzah
KOTA KINABALU: The government’s new MyKad-linked targeted diesel subsidy system is expected to save up to one billion litres of diesel annually by significantly reducing leakages, abuse and fuel smuggling, according to Finance Minister II Datuk Seri Amir Hamzah Azizan.
The new mechanism, which will take effect in Sabah, Sarawak and Labuan beginning July 1, is designed to ensure that subsidised diesel is purchased only by eligible Malaysian citizens through verification using their MyKad.
Amir Hamzah said the system marks a major shift in the government’s subsidy management strategy, enabling authorities to tighten controls over the distribution of subsidised fuel while ensuring assistance reaches the intended recipients.
“We estimate that the implementation of this system can reduce diesel leakages by as much as one billion litres every year.
“Besides lowering the government’s subsidy burden, it will also help guarantee a more stable domestic supply of diesel,” he told reporters after a briefing on the targeted diesel subsidy programme at the Sabah International Convention Centre here today.
He said the previous subsidy mechanism lacked comprehensive identity verification, allowing subsidised diesel to be purchased openly and creating opportunities for abuse and smuggling activities.
According to Amir Hamzah, Sabah has been among the areas most affected by diesel leakages due to the state’s high dependence on four-wheel-drive vehicles and pickup trucks, which are commonly used for long-distance travel.
“Demand for diesel in Sabah is naturally high because many residents rely on four-wheel-drive vehicles for transportation across vast areas.
“That is why it is important to ensure the subsidy reaches those who genuinely qualify,” he said.
Under the new system, eligible Malaysian citizens will continue to enjoy subsidised diesel prices, while non-citizens will be required to purchase diesel at market rates.
The minister said the government wants to ensure subsidies are distributed fairly and efficiently, while reducing losses caused by leakages in the supply chain.
Statistics from Op Tiris 3.0 reveal that authorities recorded 554 petrol and diesel smuggling cases nationwide between January and June this year.
Of those cases, 291 were detected in Sabah, Sarawak and Labuan, underscoring the scale of the challenge faced by enforcement agencies in curbing fuel smuggling in East Malaysia.
Amir Hamzah said each eligible Malaysian will receive a basic monthly quota of 200 litres for subsidised fuel purchases, covering both RON95 petrol and diesel.
He noted that government data indicates nearly 90 per cent of motorists in the country consume less than 200 litres of fuel each month.
“This means the vast majority of motorists will not be affected by the quota because the allocation is sufficient for their monthly needs,” he said.
Recognising the higher fuel consumption patterns in Sabah, Sarawak and Labuan, the government has introduced an additional monthly quota of 100 litres for eligible owners of pickup trucks and four-wheel-drive vehicles.
This raises their total subsidised fuel quota to 300 litres per month.
“Based on current consumption trends, around 95 per cent of diesel users consume less than 300 litres each month.
“This additional allocation should therefore be adequate for most users in Sabah, Sarawak and Labuan,” he said.
Amir Hamzah also revealed that the government is finalising assistance mechanisms for other groups that depend heavily on diesel for their livelihoods.
These include river boat operators and users of generator sets in rural and remote areas where access to electricity remains limited.
“We are working on a specific mechanism to ensure these groups continue receiving the support they need without affecting their livelihoods or economic activities,” he said.
He added that the MyKad-based diesel subsidy programme forms part of the government’s broader fiscal reform agenda aimed at creating a subsidy system that is more sustainable, transparent and better targeted towards those who genuinely require assistance.
