JUNE 10 — You’ve probably never lost sleep over what fuel a lorry uses. But right now, that question is quietly shaking Malaysia’s economy. Here’s the strange situation we’re in: pumping petrol into your family car feels cheap, thanks to government subsidies. But filling up a diesel truck? That costs significantly more than what our neighbours in Thailand or Indonesia pay. And while politicians love to argue about RON95 prices, the real bomb waiting to explode is underneath the diesel nozzle.

Why? Because diesel isn’t just for the uncle driving a Hilux. It is the bloodline of everything you buy. Think about your breakfast roti canai. The flour came on a diesel-powered lorry. The cooking oil arrived via a diesel truck. The eggs? Diesel. Even the cili boh was likely hauled by a vehicle burning diesel. Now zoom out: construction materials, factory machines, cargo ships, and the buses that get workers to their jobs—almost all run on diesel. If petrol prices go up, you feel it at the pump. Annoying, yes. But you might drive less or carpool.

If diesel prices go up, every physical good you touch becomes more expensive. A lorry driver doesn’t have a choice – he must pay the higher price, then pass that cost on to the vegetables, cement or electronics he is delivering. Within weeks, inflation hits your wallet from every direction. Petrol affects your commute. Diesel affects your entire cost of living. That is why economists say diesel shocks are more dangerous. Petrol is a headache. Diesel is a heart attack.

The neighbourhood problem. Here is our dilemma. Malaysia’s diesel is actually supposed to be subsidised. But something broken is happening: because our diesel is cheaper than in Thailand or Singapore (when subsidies work), millions of litres leak across borders every month. Smugglers fill up here and sell there. The subsidy meant for Malaysian fishermen and farmers ends up powering lorries in southern Thailand.

But now, the government is trying to float diesel prices to match the region. The result? Our diesel becomes more expensive than our neighbours’. Suddenly, our own industries – the very backbone of the economy – face higher costs than competitors in Vietnam or Indonesia. So we are trapped: keep subsidising diesel, and money bleeds out to smugglers. Remove subsidies, and every factory, farm and shopkeeper suffers.

How do we navigate the swamp? So how does Malaysia get out of this mess? Not by choosing petrol or diesel – but by being surgical. First, targeted subsidies, not blanket ones. Give diesel subsidies directly to actual users: fishermen, school buses, farmers, and logistics companies registered under a clear card system. Everyone else – luxury SUVs or older lorries not hauling public goods – pays market price. We already have the technology, such as the SKDS system. Use it fully.

Second, stop pretending petrol is harmless. We over-subsidise petrol too, which encourages wasteful driving and clogs our cities. Slowly shift petrol subsidies towards public transport and EVs – but in steps, not overnight shocks to the lower middle class. Many have long called for better train services. Given the choice, many would take the train to work. It is also about the last mile. But the problem remains – why?

Third, enforce borders, not just prices. Strengthen tracking at northern and eastern borders to stop smugglers. What is the point of a subsidy if half of it disappears into a modified tank in a Thailand-bound lorry? The bottom line. Malaysia needs to realise this: cheap petrol makes voters happy. But managing diesel prices keeps the economy alive. If we get diesel wrong, the price of bread, steel and medicine all climb. The poor – who may not even own cars – suffer the most. We do not need to choose between bankrupting the govt or bankrupting the rakyat. We need the courage to subsidise smartly, not universally. Give diesel support only to those who truly move this nation. Let the rest pay fair prices. Because in the end, an economy that runs on diesel must run on honesty, not hidden costs.

* The author is affiliated with the Tan Sri Omar Centre for STI Policy Studies at UCSI University and is an Adjunct Professor at the Ungku Aziz Centre for Development Studies, Universiti Malaya. He can be reached at ahmadibrahim@ucsiuniversity.edu.my.

 ** This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail.