By DayakDaily Team
KUCHING, July 4: The Sarawak Business Federation (SBF) has warned that the Budi Diesel scheme, if left unaddressed, risks disrupting supply chains and increasing operational costs in Sarawak’s economy, describing the current subsidy framework as impractical and misaligned with the region’s economic realities.
In a statement today, SBF said the implementation of the Budi Diesel initiative and Controlled Diesel Subsidy System (SKDS) scheme under it is “inadequate” and does not sufficiently account for the structural and geographical challenges faced in East Malaysia.
While it acknowledges the federal government’s intent to rationalise subsidies, the federation emphasised that the design and execution of the programme have fallen short, particularly for businesses operating across Sarawak’s vast distances and often limited infrastructure network.
SBF said it has received numerous complaints from members over the restrictive nature of the scheme, particularly the imposition of a rigid monthly diesel quota cap. It argued that such limits are disconnected from actual business consumption patterns in Sarawak, where logistics operations are heavily dependent on diesel-powered transport across wide and dispersed regions.
“The limitations are not merely insufficient—they are impractical, and they risk disrupting supply chain disruptions and increasing operational costs,” it added.
The construction sector was cited as a key example of the policy gap, with SBF pointing out that essential vehicles such as concrete mixer trucks and logistics vehicles transporting sand, earth, soil, and quarry materials are excluded from the subsidy framework.
“This has left suppliers with little choice but to pass on increased fuel costs, contributing to higher project costs and broader price increases that will ultimately affect consumers,” it said.
The federation also raised concerns over continued uncertainty in the implementation of the SKDS programme, citing unclear eligibility criteria, coverage scope, and application procedures.
“This has resulted in confusion and inconsistent access among businesses, which further compound the challenges faced by SMEs.”
SBF acknowledged a recent policy adjustment expanding SKDS diesel subsidy eligibility to include company-registered diesel-powered vehicles as a positive step.
However, it stressed that eligibility remains limited to sole proprietorships, excluding company-owned twin cab and 4×4 vehicles registered under Sdn Bhd entities. It said this has placed firms across manufacturing, construction, recycling, plantation, logistics, and related sectors at a competitive disadvantage, especially in Sarawak where long-distance travel and challenging terrain are common.
The federation urged policymakers to extend eligibility to company-owned utility vehicles used for legitimate business operations, arguing that this would ensure a fairer and more practical implementation of the scheme.
“If left unaddressed, these issues may place additional strain on business sustainability and contribute to broader inflationary pressures,” SBF warned.
In its recommendations, SBF called on authorities to review and recalibrate diesel quota allocations based on actual consumption patterns, expand eligible vehicle categories, adopt a region-sensitive approach that reflects Sarawak’s unique geography and economic structure, and provide clearer guidelines to reduce uncertainty.
It also urged stronger engagement with industry stakeholders to ensure policy adjustments reflect ground realities.
SBF reaffirmed its readiness to work with the government, including the federal government, to refine the subsidy rationalisation framework, stressing that a balanced and inclusive approach is essential to safeguard economic stability while achieving national policy objectives. — DayakDaily
