Starting today, June 10, Malaysians outside Sabah, Sarawak, and Labuan will now pay RM3.35 per litre for diesel—an increase of nearly 50%—as part of the government's subsidy rationalisation effort.

Finance Minister II Datuk Seri Amir Hamzah Azizan explained on Sunday, June 9, that diesel subsidies are being discontinued, raising the price from RM2.15 to RM3.35 per litre.

"The government is now ready to adjust the diesel price for all states in Peninsular Malaysia with the targeted assistance mechanism already in place," he told the New Straits Times.

The price will be reviewed weekly, and the government will monitor the situation to prevent price instability.

In Sabah, Sarawak, and Labuan, the retail price of diesel will remain at RM2.15 per litre.

However, around 30,000 private diesel vehicle owners in the B40 category will receive RM200 under the subsidy rationalisation plan.

According to Amir, this group includes individuals and small commodity owners.

"The BUDI MADANI programme provides RM200 cash aid per month to eligible private diesel vehicle and small commodity owners to help cover the increased cost of diesel fuel," he said.

About 80% of diesel users will receive sufficient cash aid under the BUDI MADANI programme to cover the RM1.20 difference between the old and new diesel prices.

Amir stated that the government expects to save RM4 billion per year.

Despite a surge in subsidised diesel volume from 6.1 billion litres in 2019 to 10.8 billion litres in 2023, there was no significant increase in diesel-powered vehicles, resulting in a tenfold increase in diesel subsidies from RM1.4 billion in 2019 to over RM14.3 billion in 2023.

"Diesel subsidies have increased tenfold, showing leakage and indicating the subsidy was not benefiting the target group," Amir said.

Despite the nearly 50% hike, Malaysia's new diesel prices remain among the lowest globally and the second lowest in ASEAN, with Thailand selling diesel at RM4 per litre, Indonesia at RM4.50, and Singapore at RM9.30. Brunei has the cheapest diesel at RM1.09 per litre.