Kota Kinabalu: The Federal Government has activated a High-Level Inter-Agency Enforcement Coordination Committee (JTPAAP) to strengthen and empower coordination among enforcement agencies to combat leakages and the smuggling of controlled goods, particularly diesel and petrol.
Sabah and Sarawak will be among the key focus areas of the operations, given the large price gap between subsidised prices, pump prices and market prices that could potentially open the door to leakages.
Domestic Trade and Cost of Living Minister Datuk Armizan Mohd Ali said this was decided during the recent Cabinet meeting following increased risks of fuel leakages due to the surge in global oil prices triggered by the ongoing conflict in West Asia.
The move also aims to ensure that enforcement against leakages and the smuggling of controlled goods can be implemented in a more integrated manner involving multiple enforcement agencies at both federal and state levels.
The risk is more pronounced in Sabah and Sarawak as both regions still enjoy the bulk diesel subsidy, which keeps pump prices lower than market prices.
“The diesel pump price in Sabah and Sarawak is currently set at RM2.15 per litre, compared to RM3.92 per litre in Peninsular Malaysia, while the current market price under the Automatic Pricing Mechanism (APM)has reached about RM4.30 per litre.
“This significant price difference means consumers in Sabah and Sarawak are purchasing diesel at less than half of its actual cost, thereby increasing the risk of abuse and smuggling if not strictly monitored,” he said.
“The committee will be chaired by Deputy Prime Minister Datuk Amar Fadillah Yusof, while the Ministry of Domestic Trade and Cost of Living (KPDN) will serve as the secretariat to coordinate enforcement operations,” he said.
Armizan said global crude oil prices had risen sharply, noting that before the conflict the Brent crude price ranged between USD$60 and USD$70 per barrel, but it has increased to between USD$90 and over USD$100 per barrel last week.
He said the sharp increase in global oil prices has widened the price gap between market prices and Malaysia’s retail fuel prices, despite adjustments made for the period from March 12 to 18, 2026.
The situation could increase the risk of fuel leakages and smuggling if not addressed through stricter and more coordinated enforcement.
Armizan said domestic leakages and the smuggling of fuel across borders could have significant financial implications for the government if not curbed.
In 2025 alone, the total bulk diesel subsidy borne by the government for Sabah and Sarawak reached approximately RM2 billion, with RM924 million allocated for Sabah and RM1.08 billion for Sarawak.
“Based on the same consumption rate and current market prices, the diesel subsidy burden for both states is expected to increase to RM4.6 billion in 2026.
“Therefore, the government sees an urgent need to strengthen enforcement across all relevant agencies through JTPAAP to ensure that government subsidies are not misused.” He stressed that enforcement will be carried out under the Supply Control Act 1961 (Act 122) and the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLA/Act 613).
Under the Supply Control Act 1961, individuals convicted of offences may face a fine of up to RM1 million, and for subsequent offences a fine of up to RM3 million, imprisonment of up to three years, or both.
Companies convicted of offences may face a fine of up to RM2 million, while repeat offences may result in fines of up to RM5 million.
“This initiative and firm action show the government’s commitment to ensuring that subsidies truly benefit the people and are not misused by irresponsible parties,” Armizan said.