SINGAPORE: With the increase in Malaysia’s diesel prices, coach passengers and tour agency customers travelling across the border can expect prices to increase soon.
On Monday (Jun 10), the Malaysian government cut most of its diesel subsidies, which it said was costing the country RM4 billion (US$853 million) annually. Prime Minister Anwar Ibrahim has said the savings will be redirected to lower-income groups.
The retail price of diesel in Peninsular Malaysia has been set at RM3.35 a litre, an increase of more than 50 per cent from the previous subsidised price of RM2.15 for commercial and private vehicles.
PASSING ON COSTS
Singapore Cab Booking, which offers transportation services between the two countries, said its bus services will be hit by the diesel price increase.
“We have the Singapore-KL overland transfer. With the 50 per cent increase in diesel prices, the price is almost equal to Singapore’s diesel price,” said CEO Farid Khan, adding that the company also has to pay toll charges.
He has 12 45-seater coaches in his fleet and other smaller buses that also use diesel. He also works with some Malaysian vendors, and they have already requested to increase their prices.
“With this increase in the price of diesel, when we want to increase our prices to our customers, that’s a problem. They will make noise, not happy the price is going up,” said Mr Khan.
Many agreements, especially for customers travelling in big groups, were signed and prices fixed months in advance, said Mr Khan, who added that he would make a loss in some cases.
The overall increase in costs will cut into his profit margins by about 20 to 30 per cent. He is currently in negotiations with his vendors about their higher asking prices.
He intends to increase his prices by at least 20 per cent over the next few months for new packages or agreements. For example, he currently charges S$550 (US$406) for a one-way coach trip to Legoland in Malaysia. But with higher diesel prices and the newly implemented vehicle entry permit system, he plans to increase this to about S$650.
“Corporate customers … they plan their holidays and book way before. Especially school holidays, two to three weeks before they already make their booking because they know last-minute booking is going to be very expensive,” he said.
“So when this thing happened, bam! It’s like they dropped a bombshell. Headache.”
Vehicle entry permits will be mandatory for Singapore vehicles entering Malaysia from Oct 1. Vehicles will be fitted with a radio frequency identification tag that costs RM10.
EU Holidays said its Malaysia tour packages, which make up about 10 per cent of its business, will likely increase in price.
Director Ong Han Jie told CNA the tour agency has not decided how much the increase will be. The operators they work with in Malaysia also have not confirmed how much their prices will increase.
“I feel that it’s going to come in soon, but maybe not immediately, because we still have confirmed services to be rendered at the moment, so those that have already committed on the pricing will be delivered as per the pricing,” said Mr Ong.
The rise in diesel prices translates to a 40 per cent increase in the cost of running the coaches in their tours, he said.
“For us, there is an increase in cost, but because the ringgit has depreciated against the Singapore dollar, in Singapore’s context, personally I didn’t feel that it’s a very big problem.”
