SHAH ALAM - The targeting of diesel subsidies involving Peninsular Malaysia users is expected to lead to an increase in the prices of goods and services.
Socio-Economic Research Centre (SERC) Executive Director Lee Heng Guie said that the increase however depended on the details of the diesel subsidy implementation mechanism that would be announced by the government through the Finance Ministry soon.
"The question is, will the subsidy given to traders using commercial diesel motor vehicles be limited in terms of the amount or the number of kilometres used per month?
"If they receive the full subsidy, then the inflationary impact on consumers may not be very noticeable.
"But, if they only enjoy half the subsidy, it might increase business costs, subsequently causing a rise in the prices of goods and services,” he noted.
According to Lee, there are two issues that needed to be clarified regarding this matter to understand the implications of targeting diesel subsidies for the public.
"First, when will the subsidy be implemented, and second, will the price of diesel be floated or increased gradually?
"Only then can we predict the impact on consumers in terms of price or inflation,” he added.