KOTA KINABALU: The Finance Ministry is reviewing a proposed framework for implementing targeted diesel subsidies in Sabah, Sarawak and Labuan, says Domestic Trade and Cost of Living Minister Armizan Mohd Ali (pic).
Armizan said the mechanism will be discussed with state governments before implementation.
He also dismissed claims that the government is being “unfair” by continuing to grant blanket diesel subsidies to Sabah, Sarawak and Labuan, stating that Putrajaya’s goal is to provide subsidies through a more targeted distribution system.
“This is because the Federal Government has never mentioned that the targeted subsidy policy would not be applied in the three regions, but rather that it would be implemented in phases.
“In principle, the diesel subsidy will continue in Sabah, Sarawak and Labuan, but it will be targeted to address risks of leakage, smuggling and abuse,” he told reporters at the Sabah Hari Raya Open House yesterday.
Armizan said when the Federal Government first introduced subsidy distribution, it was based on a targeted approach, adding that the policy will continue through improved distribution mechanisms.
As the policy on subsidies represents a major shift, it must be carefully planned and implemented in stages, he added.
“That is why in 2024, the government started with a targeted diesel subsidy in the peninsula. In 2025, we expanded the targeted approach to RON95 petrol nationwide, and both initiatives have run smoothly and will continue to be refined.”
The minister said existing fuel subsidy models, such as Budi95, Budi Madani, the Subsidised Diesel Control Scheme and the Subsidised Petrol Control Scheme, could be used as guidelines to finalise the best mechanism for targeted diesel subsidies in Sabah, Sarawak and Labuan.
“Of course, unique factors such as geography, logistics and other elements will be taken into account, as well as feedback from stakeholders.”
Armizan said it was important to note that targeted diesel subsidies, were also applied in the peninsula, adding that the perception that they are not provided there must be corrected.
He said the implementation of targeted diesel subsidies for Sabah, Sarawak and Labuan will only be considered in the next phase of execution after the 2024 and 2025 phase due to various factors.
“Among them is the high reliance on diesel in Sabah, as well as the significant price gap between these regions and the peninsula,” he pointed out.
Following global fuel price spikes amid the conflict in the Middle East, Prime Minister Datuk Seri Anwar Ibrahim made a special announcement on Thursday on diesel and fuel prices.
He announced that the government would temporarily adjust the Budi95 eligibility quota from 300 litres to 200 litres per month effective this April 1 but would maintain the subsidised RON95 price at RM1.99 per litre.
The Finance Ministry also announced that diesel prices in Peninsular Malaysia had risen to RM4.72 per litre from RM3.92, while unsubsidised RON95 and diesel in Sabah, Sarawak and Labuan remain unchanged at RM3.27 and RM2.15 per litre, respectively.
