What are the key concerns of the logistics industry regarding targeted diesel subsidies?

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Logistics Industry's Concerns on Targeted Diesel Subsidies Remain Unspecified

The Ministry of Finance (MoF) has initiated discussions with the logistics industry concerning the proposed implementation of targeted diesel subsidies. These discussions aim to gather feedback on the program's scope and criteria, specifically addressing the challenges faced by the sector and exploring potential avenues for improvement. While the government intends to proceed with subsidy rationalisation to curb leakage and smuggling, it has assured that selected users, including goods transport companies, will continue to benefit from subsidised diesel prices to mitigate the impact on the cost of goods.
MoF Engages Logistics Sector on Subsidy Rationalisation

Treasury secretary-general Datuk Johan Mahmood Merican led a discussion on April 19 with representatives from the logistics industry. The primary objective of this engagement was to solicit the views of various associations and logistics companies. The focus was on understanding the proposed programme's scope and criteria, as well as identifying the specific issues encountered by the industry and potential measures for enhancement.
Government's Rationale for Targeted Subsidies

The government's plan to implement subsidy rationalisation, as outlined in Budget 2024, is driven by the need to prevent continuous leakage and smuggling of subsidised fuel. This strategic move aims to ensure that government resources are allocated more efficiently and effectively. The MoF has indicated that this rationalisation is a key component of fiscal reform.
Continued Subsidies for Selected Goods Transport Companies

To cushion the economic impact on the general populace, the government has committed to maintaining subsidised diesel prices for specific user groups, notably goods transport companies. This measure is intended to prevent a significant increase in the prices of essential goods, thereby safeguarding the affordability for consumers. The continuation of these subsidies underscores the government's commitment to balancing fiscal prudence with social welfare.
Implementation Framework via SKDS 2.0

The mechanism for implementing the diesel subsidy rationalisation will be managed collaboratively by the MoF and the Ministry of Domestic Trade and Cost of Living (KPDN). This will be facilitated through the Subsidised Diesel Control System 2.0 (SKDS 2.0) pilot project. Upon successful approval via KPDN's MySubsidi Diesel system, companies operating within the land transport sector (specifically for goods) will be eligible to obtain fleet cards from designated oil companies for the purchase of subsidised diesel.

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What are the key concerns of the logistics industry regarding targeted diesel subsidies?

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