KUCHING: Sarawak’s relief package is a practical first defence, but it cannot fully blunt a prolonged external shock.
Universiti Malaysia Sarawak’s senior lecturer, Dr Dzul Hadzwan Husaini, said the state’s enhanced SKAS assistance, electricity discounts and rental relief amounted to a reasonably well-targeted short-term intervention amid rising cost pressures.
He said this was especially relevant as markets were already expecting fuel subsidy rationalisation, particularly for RON95, in the near term.
Such expectations alone, he added, could already influence firms’ price-setting behaviour and contribute to anticipatory inflation.
“In that environment, direct cash transfers and cost-offset measures could help stabilise household purchasing power and prevent a sharper contraction in real consumption,” he told Sarawak Tribune.
He also said that the inclusion of electricity discounts and rental relief also showed that cost pressures were not limited to food and fuel, but extended to essential fixed expenditures.
“For businesses, especially SMEs, the measures were also meaningful because energy-related costs made up a significant share of operating expenses, particularly in logistics, manufacturing and services.
“Targeted relief in utilities and rental commitments could therefore ease short-term cost burdens and reduce the likelihood of cost pass-through to consumers,” he said.
Overall, he described the package as pragmatic and timely in cushioning immediate shocks, though not perfect.
However, he said its ability to fully shield households and small businesses would become more limited if the Middle East conflict was prolonged and imported inflation intensified.
He said the key issue lay in the nature of the shock, with imported cost pressures from energy, food and intermediate goods tending to be persistent and broad-based.
“In such circumstances, fiscal support measures such as cash aid and discounts functioned more as temporary buffers than long-term solutions.
“While they could smooth consumption and help maintain business continuity, they did not fundamentally alter the economy’s cost structure,” he said.
Dzul said businesses were also likely to face stronger and more sustained pressure than households.
He noted that firms were exposed not only to direct energy costs, but also to supply chain disruptions, higher input prices and financing conditions.
“Over time, if margins were compressed, firms could still adjust prices, reduce output or delay investment.
“That meant the pass-through of cost pressures could not be fully prevented, only moderated,” he said.
He added that the current package was effective as a first line of defence.
“However, its sustainability would depend on how long the external shock lasted and how much fiscal space remained for continued intervention.”
On Sarawak’s longer-term response, Dzul said the emphasis on measures such as the Sarawak Alternative Rural Electrification Scheme (SARES) and new bridges was strategically important in strengthening resilience against external shocks.
He said Sarawak’s relatively high share of electricity generation from renewable sources, estimated at around 70 per cent, gave the state a structural advantage in energy price stability.
This, he said, reduced direct exposure to global fossil fuel price volatility, particularly in electricity generation.
“Programmes such as SARES further strengthened resilience by extending reliable and cleaner energy access to rural and remote areas, reducing dependence on diesel-based generation, which was both costly and vulnerable to supply disruptions.
“Infrastructure improvements such as bridges also contributed indirectly by improving logistics efficiency and reducing fuel use over time, lowering structural dependence on diesel, particularly in transport-intensive rural economies.”
However, he said there were important caveats.
He said Sarawak’s current level of economic complexity remained relatively moderate.
“While renewable energy capacity might be sufficient to meet existing demand, energy demand would rise significantly as the economy advanced and industrial activity expanded, particularly in energy-intensive sectors.”
At that stage, he said, the challenge would shift from availability to energy mix optimisation.
“Despite strong renewable capacity, Sarawak and Malaysia more broadly still relied on imported fossil fuels for certain parts of the energy system, meaning exposure to geopolitical risks could not be eliminated entirely, only reduced.”
In that context, he said future resilience would depend on how effectively Sarawak managed its energy transition, including diversification of energy sources, grid integration, storage capacity and lower reliance on imported inputs.
“The current measures provided a strong foundation, but continued strategic planning remained essential to ensure long-term energy security under evolving geopolitical conditions.”
