A more effective system needed

The government set the price of diesel in the peninsula at RM3.35 per litre starting June 10. — ONG SOON HIN/The Star

PETALING JAYA: Glitches and uncertainty in the Subsidised Diesel Control System (SKDS) 2.0 fleet card system could cause a slight rise in food prices in the coming weeks, industry experts say.

SME Association Malaysia president Ding Hong Sing said weaknesses in the SKDS fleet card system had marred the first week since the diesel rationalisation initiative was implemented on June 10.

“Many businesses have yet to receive their fleet cards despite applying for them earlier.

“Some have applied for the SKDS programme and still do not know if they are eligible for the refunds,” he said.

He said a more effective mechanism must be implemented and explained to avoid confusion regarding the fleet card.

As a result, he said prices of SME products could increase between 2% and 6% within the next few weeks, especially in the food processing sector.

“This is because some suppliers who did not receive transportation subsidies have already adjusted their prices. We can only wait for the government to clarify the issues,” he said.

On June 10, the diesel price in Peninsular Malaysia started retailing at RM3.35 per litre.

A total of 33 types of vehicles under the SKDS continue to enjoy subsidised diesel at RM2.15 per litre via the fleet card system.

Bumiputra Retailers Association president Datuk Ameer Ali Mydin said traders are still taking a wait-and-see approach to understand the impact of the diesel rationalisation on their businesses.

“It has been only a week, and it is still too early to tell. Most are waiting to see how they will be impacted in the coming weeks,” he said.

So far, he said most traders, particularly in the food sector, have agreed not to raise their prices as costs along the supply chain have been factored under the SKDS.

“Based on feedback, most said that they will not raise their food prices because the delivery companies can still get diesel at a subsidised cost,” he said.

However, Ameer said it has not been all smooth sailing, as there have been reports of glitches in the system.

“There are some companies still waiting for their fleet cards, and some are confused as to how much diesel one is allowed to pump,” he said.

He added that the fleet card could have been better rolled out before announcing the diesel subsidy rationalisation.

Sunway University economics professor Dr Yeah Kim Leng said that the targeted diesel subsidy plan is proceeding smoothly, with most people and businesses tacitly cooperating.

He said floating diesel prices are expected to significantly reduce cross-border smuggling activities.

“Nonetheless, the authorities will need to be vigilant against abuse of the targeted subsidies enjoyed by eligible recipients,” he said.

Moreover, Yeah said close monitoring of the knock-on effects of the floated diesel prices on inflation is needed.

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