KUCHING: The federal government has been urged to fine-tune the implementation of the BUDI MADANI diesel subsidy mechanism in Sarawak and Sabah to better reflect the unique geographical, transportation and business realities of East Malaysia.
Sarawak United People’s Party (SUPP) Central Women Section’s Chairman and Political Secretary to the Premier of Sarawak, Kho Teck Wan, said while she supports the federal government’s efforts to curb diesel smuggling and subsidy leakages through targeted subsidies, the implementation should remain practical and equitable for East Malaysia.
The nationwide BUDI MADANI Diesel targeted subsidy mechanism took effect on July 1, standardising the subsidised diesel price at RM2.10 per litre and replacing the previous blanket subsidy with a MyKad-based verification system.
Kho said complaints had already surfaced on the first day of implementation, particularly from diesel vehicle owners who applied under the BUDI MADANI programme.
“Many described the application process as confusing, while others experienced system instability that caused their applications to stall or fail,” she said in a press statement today.
She added that some companies registered under the Subsidised Diesel Control System 2.0 (SKDS 2.0) scheme have yet to receive their diesel subsidy cards despite the policy already taking effect, creating uncertainty for businesses that rely on diesel for daily operations.
Kho warned that businesses excluded from the SKDS 2.0 eligibility criteria could face higher transportation and logistics costs, which would eventually be passed on to consumers through increased prices of goods.
She said many small businesses, contractors, agricultural transport operators and rural service providers depend heavily on diesel, and overly restrictive eligibility requirements risk, excluding legitimate businesses from receiving assistance.
Highlighting Sarawak’s geographical challenges, Kho said many residents travel hundreds of kilometres for work, education, medical treatment and business, making the current monthly allocation of 200 litres insufficient for many diesel vehicle owners.
She also pointed out that diesel specifications differ between Peninsular Malaysia and East Malaysia, with Sabah and Sarawak using B20 biodiesel compared to B12 biodiesel in the peninsula.
Given East Malaysia’s higher transportation and operating costs, she said the diesel subsidy policy should not adopt a one-size-fits-all approach but instead provide a mechanism tailored to local operating conditions.
Among the improvements proposed were simplifying and expediting the BUDI MADANI application and approval process, reviewing the monthly diesel quota for Sarawak, introducing more flexible SKDS 2.0 eligibility criteria for genuine businesses, and adopting a differentiated diesel subsidy mechanism for East Malaysia.
Kho said Sarawak and Sabah had contributed significantly to Malaysia’s oil and gas industry for decades and deserved subsidy policies that recognised their unique circumstances.
“We support reforms that improve efficiency and prevent diesel smuggling and subsidy leakages.
“However, reforms must also be practical and fair. Genuine businesses that create employment, serve rural communities, and keep the local economy moving should not become unintended victims of policy implementation,” she said.
She expressed hope that the federal government would continue refining the BUDI MADANI Diesel programme based on constructive feedback to ensure the subsidy system is more practical, efficient and equitable for all Malaysians.
