KUCHING: Transport and logistics costs pose the biggest threat to Sarawak as external price pressures deepen.
Swinburne University of Technology Sarawak Campus lecturer, Dr Nivakan Sritharan, said transport and logistics costs were likely to have the most significant and widespread impact on Sarawak, given the state’s dispersed population and heavy reliance on air, river and road transport systems.
“Any increase in fuel-related costs, such as aviation surcharges or diesel prices, would directly raise the cost of moving goods across long distances.
“This would then create a cascading effect across the supply chain and push up retail prices for essential goods,” he told Sarawak Tribune.
While fertiliser and agricultural input costs were also critical, especially for rural communities and smallholders in sectors such as oil palm and agriculture, he said their impact tended to be more sector-specific.
“By contrast, logistics costs influenced nearly all economic activities, from food distribution to retail operations, making them the more dominant driver of cost escalation in Sarawak.
“In a state where logistical challenges already contributed to regional price disparities, any further rise in transport costs would amplify existing vulnerabilities,” he said.
On the state’s relief package, Nivakan said it should be seen mainly as a mechanism to soften the short-term impact of inflation rather than as a measure that directly reduced inflationary pressure.
He said the enhanced SKAS assistance, now increased to RM1,100 for households, RM600 for senior citizens and RM375 for single individuals, together with electricity bill discounts and rental reductions for small traders, provided immediate financial relief and supported purchasing power, especially among the B40 and M40 groups.
“These measures were effective in cushioning the immediate burden of rising living costs, particularly for essentials such as food and utilities.
“By targeting vulnerable groups and directing assistance towards basic consumption, the policy helped preserve a minimum level of household welfare and consumption stability during a period of economic uncertainty,” he said
However, he said the root causes of inflation, including global energy price volatility, supply chain disruptions and geopolitical tensions, remained external and were largely beyond the control of state-level interventions.
“The package could mitigate the effects of inflation, but it did not fundamentally address the underlying drivers.”
Still, he described the policy design as strategic and well targeted.
He said digital platforms for disbursement improved efficiency and reduced leakage, while support measures for SMEs, such as rental discounts, helped sustain business operations.
“In that sense, the package contributed to short-term economic resilience and stability, even if its effect on long-term inflation remained limited.”
Looking ahead, Nivakan said policymakers should watch whether rising costs were feeding through into retail food prices over an extended period, as that could signal more persistent inflationary pressure.
“Household consumption patterns were another key indicator. If spending weakened noticeably even with SKAS support in place, that would point to growing financial stress and a deeper strain on the economy.”
He said SME resilience also needed close monitoring, especially among firms in retail and food supply chains that were highly sensitive to rising operating costs.
“While rental discounts offered short-term relief, sustained increases in input and logistics costs could erode profit margins and threaten business sustainability.
“Business performance, closures and employment trends would therefore be important to watch.”
He added that longer-term strategies such as energy transition, infrastructure development and digitalisation would be crucial in easing structural cost pressures over time.
“If these initiatives succeeded, the current episode was more likely to remain a temporary shock.
“Otherwise, prolonged external pressures could evolve into a more systemic strain on Sarawak’s economy.”
