The big question is when will it happen

PETALING JAYA: The diesel subsidy rationalisation is finally here but the big question remains: when will it take effect?

Both consumers and political leaders are still in the dark over the details of the subsidy rationalisation and feel that the government should quickly clarify matters instead of leaving everyone confused.

Opposition leader Datuk Seri Hamzah Zainudin, for one, has panned the lack of clarity in the announcement by Prime Minister Datuk Seri Anwar Ibrahim on Tuesday.

“The elephant in the room is: when will the fuel subsidy rationalisation come into effect and what will the government’s mechanism to channel aid to people be?” he said in a statement yesterday.

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He claimed Anwar’s announcement had done little to alleviate the concerns of the people and left them more confused.

“The people want to know when will fuel prices go up? How can they apply for aid?

“Even after months, the government is implementing the principle of announcing first and thinking later,” he said.

Federation of Malaysian Consumers Associations (Fomca) chief executive officer Dr Saravanan Thambirajah said many people are unsure of the mechanism and timeline of the fuel subsidy rationalisation exercise.

“We hope the government can announce it with the rationalisation done gradually so we don’t shock the market,” he said.

He said some businesses could take advantage of the situation, adding that any price hike had to be justified while those who raised prices should be penalised.

Sunway University’s Prof Yeah Kim Leng said having a clearer roadmap and target date would allow the affected sectors and industries to make the necessary adjustment.

On the flip side, he said it could also trigger early price adjustments and raise inflation expectations.

“There could also be hoarding, causing localised supply disruptions.

“The government’s assurance that the fuel price adjustment would not be too drastic and destabilising may need greater emphasis.

“The government has estimated a subsidy saving of RM4bil. While the main negative is an uptick in inflationary pressure, the targeted subsidies, including cash assistance, will help vulnerable groups cope with the rise in fuel price,” he said.

Prof Yeah said the fuel subsidy reforms will not only improve the country’s public finance but also strengthen its resilience to oil price and other shocks.

Other benefits would include putting the country on a more sustainable growth path economically and environmentally.

The fuel subsidy removal, he said, would facilitate a transition to a greener and low carbon economy.