Drivers fume as Malaysia axes diesel subsidies, sending prices soaring

Malaysian drivers fumed on Monday after diesel prices shot up more than 50 per cent overnight as the government slashed subsidies, leaving some families looking to downsize and ditch their old gas guzzlers for something more economical.

The states of Sabah and Sarawak in East Malaysia were exempted from the move.

Malaysian civil servant Hanif Abdul Razak told This Week in Asia he was looking to part with his seven-seater SUV as he could no longer justify the running costs.

“I’m not ‘uber rich’,” he said. “It’s a sensible purchase considering comfort and safety for my family of six.”

To cushion the impact, the government has offered a 200-ringgit (U$43) monthly handout to some 30,000 eligible Malaysians. But the small print – requiring vehicles to be 10 years or older and worth under 100,000 ringgit (US$21,300) – excluded many middle-income drivers.

In a post widely shared on Facebook, property investor Ihsan Zainal highlighted his ineligibility for the handout, despite an expected rise in his monthly fuel bill from 1,653 ringgit to 2,576 ringgit for 769 litres of diesel.

“Even if eligible, it’s just 200 ringgit,” he said. “The difference is almost 1,000 ringgit. To whom do I claim? My clients?”

Beyond saving the government hundreds of millions of US dollars annually, ending the blanket fuel subsidy is also expected to curtail the appeal of smuggling subsidised Malaysian diesel into neighbouring Thailand, where fuel costs more.

“Malaysia cannot afford to continue losing billions of ringgit due to widespread diesel smuggling and misappropriation, when that money is better spent on improving the quality of life of the people and developing the country,” Second Finance Minister Amir Hamzah Azizan said on Sunday. Diesel will be sold