Kota Kinabalu: Sabah tourism players called on the Government to recognise tourism transportation as an essential sector eligible for diesel subsidies under the Subsidised Diesel Control System (SKDS), warning that the impending diesel price increase could have serious consequences for tourism businesses and the State’s competitiveness as a destination.
The appeal was made jointly by Sabah Tourism Federation (STF) President Tonny Chew, Sabah Tourist Association (STA) Chairwoman Melanie Chu, Sabah Enhanced Travel Innovation Association (Setia) Chairwoman Christina Wahida Kong and Sabah Association of Tour and Travel Agents (Satta) Chairman Justin Chong.
In a joint statement, the industry leaders expressed deep concern over the increase in diesel prices from RM2.15 to RM4.37 per litre scheduled to take effect in July, noting that tourism transportation operators nationwide have been significantly affected by the move.
While acknowledging the Government’s efforts to extend targeted subsidies to selected sectors, they said it was disappointing that tourism transportation providers, including tour buses, vans and boat operators, have not been included under the SKDS scheme.
They stressed that tourism transportation forms a critical backbone of the industry, enabling the seamless movement of both domestic and international visitors across destinations throughout Sabah.
“The exclusion of this sector from fuel subsidies places immense financial pressure on operators, many of whom are still recovering from the long-term effects of the Covid-19 pandemic,” they said.
The industry leaders also pointed out that the timing of the diesel price increase has created additional challenges, as a substantial number of bookings for July, August and the upcoming November-December school holiday season had already been secured and paid for in advance based on previous fuel costs.
As a result, many tourism operators are now forced to absorb significant and unplanned increases in fuel expenditure, as these additional costs cannot be retrospectively passed on to customers.
According to them, this has left numerous businesses operating on reduced margins, with some potentially facing losses.
The associations emphasised that the impact of higher diesel prices is disproportionately severe in Sabah due to several structural factors unique to the State.
Unlike Peninsular Malaysia, which benefits from diversified public transportation systems such as MRT, LRT and KTM services, tourism movement in Sabah relies almost entirely on road transportation, making tour buses and vans essential rather than optional.
They also highlighted that vehicle maintenance, repairs and spare parts are considerably more expensive in Sabah due to logistical constraints, limited supply chains and geographical challenges.
In addition, Sabah’s tourism sector depends heavily on air arrivals, unlike destinations in Peninsular Malaysia that benefit from multiple entry points by land, sea and air.
This makes cost competitiveness particularly important for the State’s tourism industry.
Given these realities, the associations said policy decisions should take regional differences into account to ensure Sabah is not placed at a structural disadvantage.
They urged the Domestic Trade and Cost of Living Ministry (KPDN) to include tourism transportation operators under the SKDS scheme and provide targeted diesel subsidies for licensed tourism vehicles, including buses, vans and boats that are integral to the tourism supply chain.
Recognising that immediate inclusion under the subsidy programme may not be feasible, the industry also proposed alternative measures, including postponing the diesel price adjustment for the tourism sector to allow operators time to revise pricing structures and honour existing bookings.
Another proposal is the introduction of a partial subsidy mechanism for licensed tourism transportation providers to help reduce the immediate financial burden on operators.
The associations further called on Tourism, Arts and Culture Minister Datuk Seri Tiong King Sing and Sabah Tourism, Culture and Environment Minister Datuk Jafry Ariffin to intervene and support the industry during what they described as a critical period.
They noted that such support is particularly important as Malaysia advances through Visit Malaysia Year 2026 and prepares for Visit Sabah Year 2027, both of which are expected to play a major role in stimulating economic growth through tourism.
They warned that failure to extend fuel subsidies to the tourism transportation sector could result in higher tour package prices, reduced competitiveness against regional destinations such as Thailand, Indonesia and Vietnam, declining visitor arrivals, the closure of small and medium-sized tourism businesses, job losses and a deterioration in the overall visitor experience.
The industry leaders said these outcomes could ultimately undermine the success of both Visit Malaysia Year 2026 and Visit Sabah Year 2027.
“Tourism is not merely a service industry; it is a major contributor to Malaysia’s economy, supporting thousands of livelihoods and promoting the nation on the global stage.
“We strongly urge the Government to act swiftly and inclusively by recognising tourism transportation as an essential sector deserving of diesel subsidies under the SKDS scheme. Timely intervention will not only safeguard industry players but also ensure that Malaysia remains a competitive and attractive destination in the regional tourism landscape, particularly in Sabah, where tourism infrastructure relies heavily on cost-sensitive transportation networks,” they said.
