The Malaysian government is considering a reduction in road tax for diesel vehicles to address the impact of rising fuel costs, Prime Minister Anwar Ibrahim stated, according to media reports.

The matter has been discussed with Transport Minister Anthony Loke, and the Ministry of Transport has been tasked with working out the details for implementation in the near term, Anwar stated.

"I have asked the Transport Ministry and the secretary-general to find ways so that, in the near future, road tax for diesel vehicles can be reduced. That can be done. There are about 1.8 million diesel vehicles. Although the number is small, they are facing difficulties because diesel prices have increased," the Prime Minister stated in a speech.

However, Anwar stated that lowering fuel prices is not viable at present because fuel subsidies impose a fiscal burden, costing the government around MYR 7 billion (US$ 1.7 billion) per month. He added that the government will maintain its targeted subsidy approach for RON 95 petrol, noting that Malaysia's fuel prices are lower compared with many oil-producing countries.

"At this point, further reductions in fuel prices are not feasible. However, road tax is an area where some relief can be provided. The overall fiscal position must be assessed, including whether sufficient funds and income are available. If there is room, further reductions can be considered," the Prime Minister added.

Subsequently, Anthony Loke stated that the Ministry of Transport is studying options for reducing road tax for diesel vehicles, with the aim of addressing the financial impact on diesel vehicle owners while maintaining government revenue.

"This mandate from the Prime Minister is clear. Vehicle owners, particularly those affected by the current pricing structure, must be supported. However, any decision must take into account the financial implications," the Transport Minister stated.

While fuel pricing in Malaysia currently operates under a floating mechanism with targeted subsidies, not all diesel vehicle owners qualify for financial assistance, which has increased cost pressures, Loke stated. The review involves multiple considerations, including revenue trade-offs and policy alignment.

"This is not a decision that can be made immediately. It involves several implications, including the level of revenue the government is prepared to forgo," the Transport Minister added.