PETALING JAYA: With diesel prices now floating at RM3.35 per litre, economists are warning businesses against profiteering.
Urging the government to crackdown on unscrupulous businesses, Malay Economic Action Council (MTEM) senior fellow Ahmad Yazid Othman said some may raise prices despite receiving targeted diesel subsidies.
The government, he said, needs to have a system in place to ensure immediate action against those who are profiteering.
He said other forms of subsidies must be in place so that businesses are discouraged from raising prices.
He also called on the government to have a more effective mechanism to crack down on subsidised diesel leakage from the fishing industry and large companies.
“The number one source of leakage has been from fishing industries and large companies,” he said, adding that effective monitoring is needed to prevent wastage of subsidised fuel.
Dr Yeah Kim Leng, economic studies programme director at Sunway University’s Jeffrey Cheah Institute, said fuel cost increases were either fully or mostly covered by the targeted subsidies.
“There is no justification for suppliers and transport service providers to charge food and beverage (F&B) enterprises more.
“In turn, F&B outlets should not use the fuel subsidy rationalisation as an excuse to raise prices.
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“This means any knock-on effects of the diesel price float on general price increases should be limited, with any price increases only being a one-off,” he said.
The new Subsidised Diesel Regulation System Pilot Project (SKDS) must be implemented quickly and seamlessly, he said.
“With diesel fuel being such an important cost component for all industries, a clear and fast implementation of SKDS is needed to prevent giving these players the pretext they need to raise prices.
“The government should also focus on other complementary measures to help manage food inflation, such as increasing domestic food production and reducing reliance on expensive food imports,” he said.
Bank Muamalat Malaysia chief economist Mohd Afzanizam Abdul Rashid stressed on the need to raise public awareness, e.g. through roadshows, about the new targeted diesel subsidy mechanisms.
“We must empower consumers to safeguard their own interest by lodging reports to the consumer tribunal if they are charged excessively.
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“Likewise, the government must ensure that those who are eligible for subsidies are registered,” he said.
Prof Dr Mohd Nazari Ismail from Universiti Malaya said awareness programmes would be key in gaining public confidence in the government and local businesses.
People may become dissatisfied with the government if the increase in prices is not properly communicated and explained, he said.
On Sunday, the government announced that diesel prices would be floated and retail at RM3.35 per litre in the peninsular from yesterday.
The Cabinet had agreed to rationalise diesel subsidies on May 21 as part of its policy to reform fuel subsidies so that they are no longer given at the pump.
To offset this, businesses will be able to apply for a monthly RM200 Budi Madani cash assistance for 33 types of vehicles under SKDS.
Currently, of the 33 types of public transportation and goods vehicles under SKDS, 10 are public transportation vehicles and 23 are goods transport vehicles.
