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by ANN ZAINUDDIN
THE Federation of Malaysian Manufacturing (FMM) has called for greater industry consultation before changes are made to commercial diesel subsidy arrangements, warning that recent quota revisions could add pressure to already elevated logistics and transportation costs.
FMM said the revised commercial diesel subsidy quotas under the Subsidised Diesel Control System (SKDS), which took effect on June 1, reduced monthly diesel allocations for most categories of goods transport vehicles despite expanding eligibility for selected vehicle classes.
Under the new revision, commercial vehicles are allocated a fixed monthly quota ranging between 900 litres and 5,000 litres per month, depending on which of the 23 eligible vehicle categories they fall into, according to reports.
In a statement, the federation said the changes were introduced without prior engagement with cargo owners, manufacturers and logistics providers, even though they could affect transportation costs, supply chain efficiency and the prices of goods.
It stated that manufacturers continue to face high logistics and transportation costs despite the recent easing of geopolitical tensions in West Asia, with many cost increases and operational adjustments remaining embedded in supply chains.
According to FMM’s third survey on the impact of the West Asia crisis on Malaysian manufacturing, trade and supply chains, conducted between May 25 and June 10, 87% of manufacturers said business conditions had either worsened or remained unchanged since early May.
The survey also found that 86% of respondents continued to face logistics-related pressures, while 51% reported higher domestic transportation costs and 49% cited higher haulage surcharges or difficulties securing transport services for certain routes.
FMM said feedback from its members showed diesel quota constraints had directly affected transport availability and haulage costs, with some operators becoming reluctant to take on deliveries after exhausting their subsidised diesel allocations.
Moreover, operators often imposed additional charges to recover higher operating costs or avoided less profitable routes altogether once they were required to use commercial diesel.
“Commercial vehicles are responsible for moving raw materials, intermediate products and finished goods throughout the economy. When transportation costs increase or transport capacity becomes constrained, the additional costs are passed along the supply chain and ultimately affect the prices paid by businesses and consumers,” the federation said.
FMM said changes to commercial diesel subsidy arrangements should be assessed not only from a subsidy management perspective but also for their potential impact on supply chain efficiency and the cost of living, particularly as the government continues efforts to manage inflationary pressures.
FMM therefore proposed a structured consultation mechanism involving manufacturers, cargo owners, logistics providers and relevant government agencies before future revisions to commercial fuel subsidy arrangements are implemented.
The federation also called for the establishment of a Crisis Adjustment Mechanism within the SKDS to allow temporary and targeted quota adjustments during major external disruptions that significantly affect transportation and supply chain operations.
FMM said the objective was not to reverse subsidy reforms but to ensure sufficient flexibility within the subsidy framework to safeguard supply chain resilience, industrial competitiveness and broader cost-of-living objectives.
It added that it has formally requested an engagement session with the Ministry of Domestic Trade and Cost of Living to better understand the basis for the revised quota allocations and discuss measures to minimise unintended impacts on supply chains and living costs.
The post SKDS diesel quotas: FMM warns tighter limits will fuel supply chain pressures appeared first on The Malaysian Reserve.
