Logistics subsidies keep essentials affordable in Sabah, S’wak, say economists

Logistics subsidies are crucial to keeping essential goods affordable for residents in the interior areas of Sabah and Sarawak, where transport and distribution costs are high, economists say.

Universiti Teknologi Mara (UiTM) Sabah economist Firdausi Suffian said geographical challenges and limited transport links made delivering goods to interior areas in the two East Malaysian regions more difficult and expensive.

“When we bring in goods from the peninsula, there are shipping, handling and transport costs, as well as additional logistics costs to deliver them to the interior.

“All these costs eventually drive up the prices of goods,” he told FMT.

Under Budget 2027, the government allocated RM250 million to expand the distribution of essential goods to rural and interior areas, a move economists say will help keep prices affordable in remote communities.

The expansion covers six new locations, including Kampung Terian in Penampang, Sabah, and Kampung Dato’ Godam in Pusa, Sarawak.

The domestic trade and cost of living ministry’s had previously identified 1,570 sales locations under the programme, with 1,480 in Sabah and Sarawak.

The programme also received RM250 million in 2026.

Firdausi said logistics subsidies, working in tandem with other forms of assistance such as STR and SARA, helped keep essential goods affordable while supporting households’ purchasing power.

He said reducing transport and distribution costs would lessen the burden passed on to consumers, complementing the government’s efforts to ease cost-of-living pressures.

However, he questioned whether maintaining the allocation at RM250 million would be sufficient given the programme’s expansion to six new locations.

Firdausi also stressed the need to improve roads and transport links to make it easier to deliver goods to interior areas.

“Subsidies like these should not become a permanent substitute for better infrastructure and transport links,” he said.

He added that addressing infrastructure gaps over the longer term would reduce reliance on distribution subsidies, freeing up public funds to be channelled into other forms of social assistance.

Ensure savings reach consumers

Meanwhile, UiTM’s Tan Peck Leong said the programme’s effectiveness should be measured by the prices at which the goods become available in targeted areas, and not merely the amount allocated.

“There is little point in the government subsidising transport costs if the savings are not passed on to consumers,” he said.

Tan said logistics subsidies also complemented STR and SARA by helping to keep prices in check, while benefiting residents who do not qualify for direct cash assistance.

He also said the ministry should ensure adequate supplies and monitor whether retailers comply with approved prices.

He proposed that the domestic trade and cost of living ministry publish “before” and “after” price comparisons, particularly at the six newly expanded locations.

Tan urged the government to work with retailers, wholesalers, cooperatives and village shops to make use of existing distribution networks.

“People in the interior areas of Sabah and Sarawak should not have to pay substantially more for basic necessities simply because of where they live,” he said.

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