Malaysia’s diesel subsidy removal fuels inflation fears

Fears are mounting in Malaysia that everything from eating out to domestic holidays will become more expensive as the cost of an end to generous diesel subsidies ripples out through the economy.
(SCMP) – Malaysia’s government – saddled with a 1.5 trillion ringgit (US$318 billion) debt pile partly blamed on losses from the multibillion-dollar 1MDB scandal – scrapped the blanket diesel subsidy last Monday, as its seeks to deflate a ballooning subsidy bill that cost nearly 80 billion ringgit last year alone.

But businesses across sectors from transport to restaurants are now warning they may have to pass on rising costs to customers, amid an end to what had been Southeast Asia’s second cheapest diesel.

“Even if the tour bus is not moving, we still need to leave the air conditioning on, otherwise our customers will complain,” Tai Pok Kim, secretary general of the Peninsular Malaysia Tour Bus Operators Association, told This Week in Asia.