Planning to Cuti-Cuti Malaysia? Your Trip Could Cost 30% More!

If you’re planning for a Malaysian getaway, brace yourself for a potential price hike. The recent government policy change in diesel subsidies could see your travel costs increase. In June 2024, the Malaysian government removed blanket diesel subsidies in Peninsular Malaysia, a move with possible far-reaching impacts on many businesses, industries, and the general cost of living. 

According to a report by The Star, one area that could see a potential 30% increase is the local holiday travel industry. While most industries still receive direct subsidies by application, the inbound tour bus industry will not be subsidised. This will affect tourists visiting Malaysia. But Malaysian holidaymakers or those who frequently “Balik Kampung” may not be spared from price hikes. Express buses still receive some subsidised fuel, but it’s in limited amounts. 

What this means is that if you’re planning to travel by express bus, you may need to dig a little deeper into your pockets.  

Subsidies 101: What Are Subsidies? 

Think of subsidies as the government’s way of keeping prices low for everyday folks. The government pays a part of the diesel cost, which means you pay less at the pump. It’s like having a discount coupon that’s always active.  

For example: If 1 liter of diesel fuel costs RM3.50 in the market, you only pay RM2.00 because the government absorbs the difference of RM1.50. 

Besides fuel, the government subsidises many everyday essentials such as rice, cooking oil, and eggs. Some subsidies are only for the lower-income group, while some benefit all Malaysians regardless of income segment. 

Why the Change? 

So, why did the government decide to shake things up? While having part of the prices of goods paid by the government is great for consumers, it was a huge financial burden. According to the government, they removed the subsidy for several reasons: 

Cost-cutting: Subsidies are expensive, costing billions of Ringgits every year. Removing blanket subsidies can reduce this massive expense. 

Fighting fuel smuggling: When fuel is cheaper in one country than its neighbors, it may lead to smuggling. Removing blanket subsidies helps curb this illegal activity. 

Targeted assistance: Prior to this, Malaysia has followed a broad-based subsidy system, which means everyone who fills diesel at the pump would be able to enjoy the subsidised fuel. By moving away from a one-size-fits-all approach, they want to focus on supporting specific groups.

How This Affects You 

The removal of blanket diesel subsidies can affect you in several ways: 

Higher fuel costs: If you own a diesel vehicle, prepare for increased costs at the pump. 

Rising prices of goods and services: Diesel isn’t just for everyday cars. It’s used in logistics, manufacturing, construction, agriculture, and many other industries. As diesel costs rise, and if they are not approved for targeted subsidies, these industries might pass on the extra expense to consumers. 

Inflation pressure: The domino effect of higher diesel prices can contribute to overall inflation in the economy. 

However, it’s not all bad news. If you’re not in the high-income bracket (T20), you may be eligible for financial aid through programs like Budi Madani. Small business owners should also explore these support options. 

Navigating the New Financial Landscape 

With these changes going on, your finances could be affected in many ways. From possible higher spending on food, groceries, and holidays, it’s important to proactively adjust your budget to avoid overspending or getting into debt. Here are some tips you can consider: 

Reassess your budget: Take a fresh look at your spending plan. You might need to allocate more for some areas of spending, while cutting back on others. 

Shop smart: Look for alternative, lower-priced brands and suppliers. This doesn’t mean compromising on quality, but rather being savvier and price-conscious about your choices. 

Track your expenses: Keep a close eye on where your money is going. This can help you identify areas where you might be overspending and make necessary adjustments. 

Plan ahead: If you’re thinking about a Cuti-Cuti Malaysia trip, factor in these potential price increases when budgeting for your vacation. 

Stay informed: Keep an eye on news and government announcements. There might be new support programs or changes that could affect your finances.