Fuel subsidy review begins in East Malaysia after implementation issues
The federal government has begun talks with Sabah and Sarawak to refine the targeted diesel subsidy mechanism after implementation problems surfaced following its extension to East Malaysia and Labuan.
Source: DayakDaily · July 21, 2026 at 6:22 PM · AI-assisted report
Single-source
KUALA LUMPUR, 22 JULY 2026 —
KUALA LUMPUR, July 21 — The federal government has initiated discussions with Sabah and Sarawak to refine the targeted diesel subsidy mechanism following implementation challenges in the two states and Labuan.
Market Impact
Domestic Trade and Cost of Living Minister Datuk Armizan Mohd Ali said the Ministry of Finance (MOF) is leading the engagement process to address issues that emerged after the mechanism, first introduced in Peninsular Malaysia in 2024, was extended to East Malaysia.
The government is collaborating with state authorities to improve data collection, verification, and delivery of subsidies, ensuring they reach eligible recipients.
Armizan said state agencies could assist in registering and verifying eligible recipients, particularly in areas with limited federal access. The MOF is meeting government agencies and elected representatives in Sarawak and Sabah to identify challenges and tailor solutions to local conditions.
Any revisions to the subsidy mechanism will consider cost of living, subsidy leakages, and fiscal sustainability. The government maintains that blanket subsidies are no longer viable and will focus on targeted assistance for the underprivileged.
Outlook The government aims to finalize improvements to the diesel subsidy mechanism in collaboration with state governments, ensuring efficient and equitable distribution. Further updates on policy adjustments are expected as consultations progress.