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Kota Kinabalu: The Federal Government has rejected claims of unfairness in maintaining blanket diesel subsidies in Sabah, Sarawak and Labuan, saying targeted subsidies will be introduced in stages.

Domestic Trade and Cost of Living Minister Datuk Armizan Mohd Ali (pic) said the government has not ruled out diesel subsidy rationalisation in the three regions but will implement it gradually due to the scale and complexity involved.

He said Malaysia’s subsidy reform policy focuses on targeted distribution to reduce leakages such as abuse and smuggling while retaining subsidies.

Armizan said the Ministry of Finance is studying a framework for targeted diesel subsidies in Sabah, Sarawak and Labuan, with proposals to be discussed with the respective state governments before implementation.

He added that existing mechanisms and regional factors, including reliance on diesel, geographical challenges and higher logistics costs, will be considered to ensure the policy does not burden the people.