Review diesel quota for Sarawak to match vast geography, industry demand, says Sheda advisor

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By DayakDaily Team

KUCHING, June 23: The diesel quota mechanism under Malaysia’s targeted fuel subsidy system should be reviewed for Sarawak based on real operational requirements rather than arbitrary monthly limits, as many contractors, farmers and workers continue to depend heavily on diesel-powered vehicles to travel long distances for work across the State’s vast geography.

Sarawak Housing and Real Estate Developers’ Association (Sheda) advisor Dato Sim Kiang Chiok said while the federal government’s shift from the RM400 monthly cash assistance under Budi Diesel to a targeted fuel quota system reflects efforts to rationalise subsidies and reduce leakages, the new mechanism must be carefully calibrated to avoid unintended impacts on states with unique logistical realities such as Sarawak and Sabah.

Under the revised framework, eligible users are provided subsidised diesel at RM2.10 per litre for up to 200 litres monthly, with an additional 100 litres for qualified pickup and SUV owners.

“This structure may be sufficient for many private motorists in urban areas, but may not fully reflect usage patterns in rural and interior regions,” he said in a statement today.

He stressed that Sarawak’s geography, where settlements are widely dispersed and public transport options are limited or unavailable in many areas, results in significantly higher daily travel distances.

“Many small business owners, contractors, farmers, transport operators and workers rely heavily on diesel-powered vehicles to travel between towns, project sites and plantations,” he added.

While welcoming the additional allocation for pickup truck owners, he urged the Ministry of Finance Malaysia to continuously monitor actual consumption patterns in East Malaysia to ensure that quotas remain practical and responsive.

He also highlighted that attention must be given to industries with high diesel consumption, particularly construction, logistics, manufacturing, quarrying and transportation, which form key pillars of Sarawak’s economy.

“Any inadequacy in subsidised diesel allocation for these sectors would inevitably raise operating costs.
“These cost increases will eventually be passed down the supply chain, leading to higher construction prices, increased logistics expenses, rising manufacturing costs, higher prices of goods and services, and ultimately greater pressure on the cost of living,” he cautioned.

Sim warned that in Sarawak, where freight and transportation already account for a significant portion of business expenditure, the inflationary impact could be more severe compared to Peninsular Malaysia.

He therefore called for subsidised diesel allocations under the Subsidised Diesel Control System (SKDS) and other industrial schemes to remain sufficient, flexible and aligned with actual business demand.

“Quotas should be based on operational requirements rather than fixed ceilings, with a review mechanism introduced to accommodate seasonal demand, business expansion and major infrastructure projects,” he said.

He emphasised that subsidy rationalisation should aim to eliminate leakages without undermining economic productivity, noting that effective implementation could still generate fiscal savings while safeguarding growth-driving sectors.

“For Sarawak, targeted subsidies are acceptable, but allocations for industry, logistics and construction must remain adequate. Otherwise, any fiscal savings may be offset by higher inflation and reduced competitiveness,” he said.

He added that with global oil prices showing signs of stabilisation and easing geopolitical tensions, there is potential for fuel cost pressures to moderate, and any resulting fiscal savings should be channelled to support productive sectors and ease the burden on regions like Sarawak, where transportation remains a critical economic lifeline. — DayakDaily

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