Kota Kinabalu (Mar 27) - The Malaysian government has decided to retain diesel subsidies in Sabah and Sarawak, despite mounting fiscal pressures caused by global fuel price fluctuations.
Mustapha Sakmud, Minister in the Prime Minister’s Department for Sabah and Sarawak Affairs, said the decision is aimed at protecting residents in both states from rising transportation and living costs. He noted that the move reflects the government’s commitment to cushioning the impact of external economic pressures on East Malaysia.
Under the current arrangement, diesel prices in Sabah remain fixed at RM2.15 per litre, with the federal government absorbing the difference between the subsidised rate and market prices. The subsidy programme is expected to cost billions annually, with a significant portion allocated to Sabah.
Authorities emphasised that maintaining the subsidy is essential due to Sabah’s strong dependence on diesel-powered transport. Unlike parts of Peninsular Malaysia where targeted subsidy mechanisms have been introduced, diesel continues to play a major role in logistics, agriculture, fisheries, and daily commuting in Sabah because of geographical and infrastructure challenges.
The government also acknowledged that fuel subsidies represent a substantial financial commitment. However, keeping diesel prices stable in Sabah and Sarawak is seen as necessary to prevent a wider increase in the cost of goods and services.
For Sabahans, the continued diesel subsidy provides important financial relief, particularly as fuel costs directly influence the prices of everyday goods and services. Diesel is widely used across the state for transporting goods, operating fishing boats, and supporting agricultural activities.
Rural communities are expected to benefit significantly, as they rely heavily on diesel-powered transportation due to longer travel distances and limited alternatives. Stable fuel prices help ensure that essential supplies remain accessible and affordable.
For businesses, especially those involved in logistics and supply chains, the subsidy helps manage operating costs and maintain price stability. This is especially important in Sabah, where transportation expenses are generally higher compared to other parts of Malaysia.
Overall, the government’s decision helps maintain economic stability in the state while easing the cost burden on Sabahans who depend heavily on diesel in their daily lives.
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