Kuala lumpur: The ongoing conflict in West Asia is poised to increase Malaysia's construction industry's diesel expenses by RM1.1 billion in 2026, as indicated by the elevated average diesel prices since the unrest began, according to Juwai IQI co-founder and group chief executive officer Kashif Ansari.

According to BERNAMA News Agency, Kashif Ansari highlighted that although the increased costs present a significant challenge, they remain manageable. The government and industry stakeholders are well-equipped to address the issue. He noted that the conflict has persisted with intermittent escalations and no definitive resolution in sight, resulting in diesel costs averaging about RM2,000 per new home. This added expense is deemed manageable within the sector, which is crucial for the provision of affordable housing. Kashif emphasized that both the government and industry have already implemented practical solutions to maintain the progress of new housing developments.

Kashif referenced data from the Department of Statistics Malaysia (DOSM), stating that the diesel price before the conflict stood at RM3.04 per litre. Over the 20 weeks since the conflict's onset, the average diesel price rose to RM4.80 per litre, marking a 57.7 percent increase. To project the potential costs if the conflict-induced prices persist throughout the remainder of 2026, this average increase was applied to the volume of unsubsidised diesel expected to be used by the construction industry. The outcome was an estimated additional cost of about RM1.1 billion, or approximately RM25 million per week.

At its peak, the diesel price reached RM6.72 during the week of April 9. Malaysia's construction sector reportedly consumes around 1.4 billion litres of diesel annually, with approximately 740 million litres purchased at the full, unsubsidised market price.

Kashif pointed out that while the construction industry benefits from subsidised diesel, off-road machinery, such as excavators, cranes, piling rigs, and generators, do not qualify for these subsidies and must pay the full market price. The government's diesel subsidy reform retained protections for commercial fleets, enabling many vehicles to purchase diesel at RM2.15 per litre under the subsidised diesel control system (SKDS) fleet-card system, which is substantially below the market rate.

Kashif suggested that extending the subsidy to include ready-mixed concrete trucks, concrete mixer trucks, and cranes could further benefit the construction sector, as these vehicles are essential to operations and consume significant amounts of diesel. Additionally, increasing the quotas for contractors in rural and interior regions could address the need for longer travel distances and higher fuel usage. These targeted adjustments would help mitigate short-term cost increases without transferring them to consumers. He emphasized that the construction industry could shield itself from escalating diesel costs by ensuring all eligible vehicles are registered for the appropriate subsidies.