DIESEL PRICE GAP REFLECTS STRUCTURAL REALITIES, SUPPORTS NATIONAL POLICY FRAMEWORK - CILTM SABAH

By Jailani Hasan

LABUAN, March 28 (Bernama) -- The Chartered Institute of Logistics and Transport Malaysia Sabah Section (CILTM Sabah) has expressed its support for the federal government’s approach to addressing the diesel price differential between Peninsular Malaysia and East Malaysia, emphasising that the pricing structure reflects underlying structural and logistical realities rather than preferential treatment.

CILTM Sabah chairman Daniel Doughty said Sabah operates in a fundamentally different supply chain environment, where the cost of distributing fuel is significantly higher due to geography, network fragmentation and lower economies of scale.

"Fuel distribution in Sabah involves multi-modal logistics chains, from refinery to primary ports, onward to secondary ports, and finally inland distribution across dispersed demand centres, in contrast to the more consolidated, high-volume systems in Peninsular Malaysia.

"Industry observations indicate that logistics and distribution costs in Sabah can be two to three times higher per litre, driven by multi-leg transport dependencies, lower volume throughput per node, and higher last-mile delivery costs in rural and interior areas.

“These are structural conditions inherent to Sabah’s logistics landscape. The pricing mechanism adopted by the federal government takes into account the cost-to-serve dynamics to ensure that businesses and consumers are not disproportionately burdened,” he told Bernama today.

He said that without such calibrated measures, additional costs arising from higher logistics complexity would inevitably be passed on across the supply chain, affecting overall economic stability.

"Sabah’s logistics landscape is characterised by dispersed population centres, limited infrastructure connectivity in certain regions, and reliance on both maritime and road transport.

"Unlike the hub-and-spoke efficiency of Peninsular Malaysia, Sabah operates a fragmented, multi-node distribution network, resulting in higher per-unit logistics costs, longer delivery cycles and increased exposure to supply chain disruptions,” Doughty said.

He stressed that fuel pricing plays a critical role in moderating these cost pressures, particularly in sectors that are highly dependent on diesel.

"The organisation said the current pricing approach serves as a stabilising mechanism within the broader national economic framework, ensuring that essential goods, construction activities and small and medium enterprises, especially in rural areas, remain sustainable.

“Policy measures that take into account regional cost structures are essential to ensure balanced development across the Federation. Uniform pricing without considering these differences would lead to uneven economic outcomes,” he added.

Doughty highlighted that the diesel pricing structure in East Malaysia reflects necessary economic adjustments aligned with national policy objectives, underscoring the importance of informed public understanding of logistics cost structures in shaping effective and equitable policymaking.

--BERNAMA