Kota Kinabalu: The Federation of Sabah Industries (FSI) welcomes the government’s continued efforts to enhance the Budi Diesel Subsidy Scheme and targeted diesel subsidy mechanism to ensure assistance reaches those who genuinely need it while promoting greater fiscal responsibility.
While supporting the principle of targeted subsidies, FSI urges the Government to adopt a Sabah-sensitive approach during the implementation phase to minimise unintended cost pressures on businesses, essential services and local communities.
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Sabah’s unique geographical and economic landscape—including vast travel distances, dispersed districts, rural terrain, reliance on road and marine transport and infrastructure limitations—means diesel remains an operational necessity for many sectors.
For many Sabahans, particularly those in rural and interior areas, diesel-powered four-wheel-drive vehicles, lorries, boats, machinery and generators are essential for transportation, agriculture, fisheries, construction, manufacturing, logistics and daily livelihoods.
FSI cautions that insufficient flexibility in the scheme could result in legitimate users facing delays in approvals, inadequate quota allocations or administrative challenges, potentially disrupting business operations, increasing logistics costs and driving up the prices of goods and services.
To ensure a smooth transition, FSI urges the government to review diesel quotas based on actual operational needs, including travel distances, vehicle usage, industry requirements and rural conditions; provide a clear transition period; simplify application and renewal processes; expedite approvals and appeals for SMEs, rural operators and eligible businesses; expand support through district-level counters and mobile outreach; and maintain regular engagement with Sabah industry stakeholders to ensure implementation reflects local realities.
FSI believes subsidy reforms should balance fiscal sustainability with economic practicality. While preventing subsidy leakages is important, implementation should also safeguard legitimate businesses and communities from unintended consequences.
“Sabah’s industries already contend with higher logistics costs, infrastructure constraints and geographical challenges. These realities must be factored into policy implementation to ensure the Budi Diesel Subsidy Scheme strengthens, rather than undermines, business competitiveness and economic resilience,” FSI said.
FSI reaffirmed its commitment to working closely with the Government by providing constructive industry feedback and practical recommendations.
With transparent communication, effective implementation and safeguards tailored to Sabah’s needs, the Federation believes the scheme can achieve its objectives while protecting livelihoods, supporting SMEs and strengthening the state’s economy.
