Builders group appeals to expand diesel subsidy to cover construction vehicles

• The cutting of blanket diesel subsidies has increased the cost of construction materials like quarry products and ready-mix concrete, indirectly affecting the industry, as the majority of construction contracts are fixed-price lump sums, said MBAM and PKBM in a joint statement on Thursday.

KUALA LUMPUR (June 13): The Master Builders Association Malaysia (MBAM) and Persatuan Kontraktor Bumiputera Malaysia (PKBM) have appealed to the federal government to include vehicles transporting building materials and cranes in the list of transportation eligible for diesel subsidies.

The cutting of blanket diesel subsidies has increased the cost of construction materials like quarry products and ready-mix concrete, indirectly affecting the industry, as the majority of construction contracts are fixed-price lump sums, said MBAM and PKBM in a joint statement on Thursday.

While acknowledging that the decision to implement the subsidy rationalisation programme was made public late last year, the associations said more clarity on the “soft landing” for essential logistics providers supporting the construction industry is needed.

Thus, MBAM and PKBM urged the government to include vehicles transporting these materials in the fleet card system, to balance subsidy objectives and manage construction costs, particularly among small contractors.

MBAM and PKBM also called on project owners to include provisions for the variation of price (VOP) for materials, to ensure the construction industry’s sustainability.

The government implemented a floating diesel price mechanism in the peninsula, following the subsidy removal effective June 11. This raised the pump price of diesel at all retail stations to RM3.35 per litre, up RM1.20 from previously.

Meanwhile, the retail price of diesel fuel in Sabah, Sarawak, and Labuan remains at RM2.15 per litre.

To mitigate the impact on domestic prices, selected sectors have been approved to purchase diesel at subsidised rates. The lowest rate is RM1.65/litre for fishermen, followed by RM1.88/litre for land public transport under the Subsidised Diesel Control System (SKDS) 1.0, and RM2.15/litre for eligible logistics vehicles via a fleet card mechanism under SKDS 2.0.

On Wednesday (June 12), Domestic Trade and Cost of Living Minister Datuk Armizan Mohd Ali said the government was considering adding several types of freight transport vehicles to the list of transportation eligible for diesel subsidies under SKDS 2.0.

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