KOTA KINABALU – The federal government expects its upcoming MyKad-based targeted diesel subsidy system to save up to one billion litres of fuel every year. The mechanism plans to eliminate cross-border smuggling and structural abuse across the domestic supply chain.
Finance Minister II Datuk Seri Amir Hamzah Azizan announced that the framework will take effect in Sabah, Sarawak, and Labuan on 1 July 2026. The new approach links subsidised purchases directly to verified identity cards, ensuring only eligible Malaysian citizens benefit from the lower prices.
The previous strategy lacked comprehensive verification at the pump, allowing anyone to purchase subsidised fuel openly. This regulatory gap created massive opportunities for illicit trade and supply leakages. According to recent data from Op Tiris 3.0, authorities recorded 554 fuel smuggling cases nationwide during the first half of this year, with nearly half occurring in East Malaysia.
Under the incoming framework, eligible individuals will receive a basic monthly quota of 200 litres for both RON95 petrol and diesel. Government data reveals that nearly 90 per cent of domestic motorists consume less than this amount each month, making the base allowance highly practical for the general public.
However, East Malaysian motorists frequently depend on large pickup trucks and four-wheel-drive vehicles to navigate long-distance travel. To accommodate these specific regional requirements, eligible owners in Sabah, Sarawak, and Labuan will receive an additional 100 litres per month, bringing their total monthly allowance to 300 litres.
The government is also working to finalise tailored distribution channels for rural communities who depend on diesel for essential services. These groups include local river boat operators and families using remote generator sets for electricity. Ministry officials are currently structuring a dedicated mechanism to guarantee that these vulnerable populations continue to receive appropriate financial assistance.
This video features the official media briefing by the Finance Minister II detailing the fiscal impact and logistics of the targeted fuel subsidy rollout.
