The MCA Economic and SMEs Affairs Committee welcomes the government’s indication that it is reviewing proposals to expand the scope of diesel subsidies, as conveyed by the Political Secretary to the Finance Minister. However, this review must be accelerated, with clear and actionable measures introduced promptly to ensure that all genuinely affected sectors receive timely and meaningful relief from escalating cost pressures.

With diesel prices nearing an unprecedented level of RM7 per litre, the issue has evolved beyond routine price fluctuations into a structural challenge affecting the entire production chain. Sectors currently excluded from subsidy support, particularly paddy farming, are facing acute strain as costs related to transportation, irrigation, and machinery continue to rise sharply, compressing already thin margins.

The impact of rising diesel prices is far-reaching, extending well beyond logistics into key economic pillars such as agriculture, construction, and manufacturing. Persistently high input costs in these sectors will inevitably be passed through to consumers, fuelling broader inflationary pressures and increasing the cost of living.

It is therefore imperative for the government to engage more actively with industry stakeholders and grassroots communities, especially those not presently covered under existing subsidy mechanisms. A more inclusive and pragmatic approach is required to broaden the subsidy framework and deliver targeted, effective assistance.

Although current targeted subsidies and cash assistance have provided some cushioning for selected groups, such as logistics operators, smallholders, and lower- to middle-income vehicle owners, and have contributed to curbing leakages and misuse, significant structural gaps remain. Key sectors such as C2 deep-sea fishing vessels, agricultural machinery operations, construction activities, tourism buses, and trailer transport continue to be excluded despite their heavy reliance on diesel.

The consequences are increasingly evident. Deep-sea fishing operators are scaling back or halting operations, raising concerns over national food supply. Small-scale farmers face administrative barriers and unclear eligibility, while transport and tourism operators are grappling with rising costs that may ultimately be passed on to consumers. In construction, the absence of targeted support for diesel-powered heavy machinery is driving up project costs and could have downstream effects on property prices.

A more refined and needs-based subsidy model is essential. Policy design should take into account actual usage patterns, consumption levels, and business scale, while simplifying application procedures and enhancing transparency to ensure accessibility, particularly for small and medium enterprises.

Diesel subsidies should be positioned not merely as a temporary relief measure, but as a strategic instrument to stabilise the economy and protect livelihoods. At the same time, this must be complemented by longer-term energy policy reforms to gradually reduce dependence on diesel and strengthen national economic resilience.

Datuk Ir Lawrence Low
MCA Economic & SMEs Affairs Committee Chairman
MCA Vice President

13 April 2026

-MCA Comm-