By Datuk Ts Dr. Hj Ramli Amir, former President of the Chartered Institute of Logistics and Transport (CILT) Malaysia and Vice-President of CILT International for Southeast Asia
KOTA KINABALU: The Kadazandusun Chamber of Commerce and Industry (KCCI) has taken a measured but firm stance on the federal government’s targeted subsidy reforms—supporting their intent while cautioning against unintended disruptions on the ground.
At the heart of this position lies a critical but often underappreciated reality: in East Malaysia, fuel policy is not merely a fiscal instrument but a determinant of logistics continuity.
(https://jesseltontimes.com/2026/07/04/kcci-backs-national-subsidy-objectives-and-urges-agile-enforcement-to-protect-east-malaysian-smes-from-implementation-bottlenecks/)
KCCI President Datuk Ladislaus Maluda rightly acknowledges that moving away from blanket subsidies is both necessary and prudent in an era of fiscal pressure and global uncertainty.
Ensuring that public funds are directed toward those who need them most is a sound policy objective. Yet, as he emphasises, the success of such reforms ultimately depends not on intent, but on execution—particularly in regions where economic structures differ significantly from those in Peninsular Malaysia.
Nowhere is this divergence more evident than in the logistics landscape of Sabah and Sarawak. Diesel is not simply a fuel for heavy industry; it is the lifeblood of everyday commerce.
From rural farmers transporting produce, to small traders supplying town markets, to contractors moving materials across difficult terrain, diesel-powered vehicles form the backbone of first-mile and last-mile connectivity.
These are not large, formal fleets, but a dispersed network of small operators, many of whom straddle the line between personal and commercial use.
It is within this context that KCCI’s concerns over the current diesel subsidy mechanism become particularly salient. As highlighted by Mr Carl Moosom, the existing framework—built on strict compliance protocols and layered administrative requirements—does not reflect the operational realities of East Malaysian SMEs.
Unlike the more accessible BUDI MADANI approach for RON95, the diesel mechanism introduces friction precisely where fluidity is most needed: during the physical movement of goods.
The implications are not abstract. When fuel access becomes uncertain or administratively burdensome, logistics efficiency deteriorates. Small operators may reduce trip frequency, consolidate loads inefficiently, or delay deliveries altogether.
For supply chains already characterised by low volumes, long distances, and limited redundancy, even minor disruptions can cascade into market shortages, price volatility, and income instability.
KCCI’s proposal of a simplified baseline allocation—200 litres per month for MyKad holders in East Malaysia—should therefore be understood not as a subsidy expansion, but as a logistics stabilisation measure.
It provides a minimum operational guarantee, ensuring that essential economic activities can continue without interruption. Beyond this baseline, more structured and targeted mechanisms can still apply, preserving the broader objectives of subsidy rationalisation.
This approach reflects a deeper principle in transport and supply chain policy: systems must be designed around actual usage patterns, not idealised models. In East Malaysia, the dominance of hybrid personal-commercial vehicle use, the reliance on informal logistics networks, and the geographical dispersion of economic activity all demand a more adaptive framework.
A one-size-fits-all compliance model risks misaligning policy with practice, ultimately undermining both efficiency and equity.
KCCI’s call for administrative flexibility is therefore both timely and constructive. By offering to work collaboratively with the Ministry of Finance and the Ministry of Domestic Trade and Cost of Living, the Chamber is positioning itself not as a critic of reform, but as a partner in refining its implementation.
This is precisely the kind of institutional engagement needed to bridge the gap between national policy design and regional operational realities.
As Malaysia advances its subsidy rationalisation agenda, the challenge will not be in defining policy direction, but in calibrating its delivery.
In East Malaysia, where logistics is inseparable from livelihood, ensuring a reliable and accessible diesel supply is essential. Without it, well-intentioned reforms risk stalling not just vehicles, but the very supply chains that sustain local economies.
