KUALA LUMPUR (April 16): The Malaysian Institute of Economic Research (MIER) has called for a recalibration of Malaysia’s fuel subsidy framework, proposing a gradual reduction in RON95 subsidies with savings redirected to ease diesel costs for businesses, as firms grapple with rising expenses and economic uncertainty.
In a statement on Thursday, MIER said reallocating subsidy spending toward diesel — widely used by small and medium-sized enterprises (SMEs) for transport and machinery — would help lower operating costs and support business continuity.
“Targeted diesel support can ease cost pressures, particularly for SMEs reliant on logistics and heavy equipment,” the think tank said.
However, it stressed that such measures should remain temporary and targeted, given limited fiscal space.
The proposal comes as Malaysian businesses contend with elevated diesel prices and ongoing supply chain disruptions, factors increasingly cited as weighing on margins. Unsubsidised diesel prices had climbed as high as RM6.72 per litre before easing to about RM5.97, a level expected to hold through next week.
The government has already stepped up assistance under its diesel subsidy programmes, including Budi Agro-Komoditi and Budi Diesel Individu, in April.
Separately, MIER is proposing a temporary reduction in the sales and service tax (SST) rate to 5% for a two-year period, excluding sin sectors such as alcohol, tobacco and gaming. The move, it said, could provide near-term relief for both consumers and businesses facing cost pressures. Currently, Malaysia’s sales tax bands are generally 5% or 10%. Service tax is 8% for most categories and 6% for select sectors.
MIER also urged authorities to standardise and lower stamp duties on business restructuring and loan repayments to reduce friction in corporate adjustments.
To bolster external competitiveness, it called for enhanced support for exporters, including a more proactive role from the Export-Import Bank of Malaysia, as firms navigate heightened global trade volatility and intensifying competition.
Edited ByKang Siew Li
