Malaysia’s Fishing Industry Faces a Diesel Reality Check

For thousands of Malaysian fishermen, 2026 has brought a hard truth: diesel is no longer cheap, and it is not going back to what it was.

With subsidized diesel sitting at RM3.35 per litre and unsubsidized rates climbing past RM5.52, the fishing industry is feeling the pinch at every level. From small-scale coastal operators in Kuala Terengganu to large trawler fleets out of Penang and Perak, the maths has changed.

This article breaks down exactly how rising diesel costs are affecting Malaysia’s fishing industry and what operators can do to keep their businesses running.

The Numbers: What Diesel Actually Costs Fishermen Now

Let’s look at real-world diesel consumption for different types of fishing operations.

Coastal Fishing Boats

A typical inshore fishing boat with a 100-150HP engine uses about 150-300 litres per trip. Most coastal fishermen make 15-20 trips per month.

Previous cost (RM2.15/litre): RM322 to RM645 per trip
Current cost (RM3.35/litre): RM502 to RM1,005 per trip
Monthly increase: RM2,700 to RM7,200 extra

For a fisherman who was already operating on thin margins, that is a significant hit.

Trawlers

Medium-sized trawlers operating 3-5 day trips consume 800 to 2,000 litres per trip, with 4-6 trips per month being typical.

Previous monthly diesel cost: RM6,880 to RM25,800
Current monthly diesel cost: RM10,720 to RM40,200
Monthly increase: RM3,840 to RM14,400

Purse Seiners

Large purse seiners working the deeper waters off Sabah and the South China Sea are among the heaviest consumers. A single trip can burn 3,000 to 5,000 litres.

Per-trip increase at RM1.20/litre difference: RM3,600 to RM6,000 extra
Monthly impact (3-4 trips): RM10,800 to RM24,000 additional cost

These are not small numbers. For many operators, this is the difference between a profitable month and a loss.

The Ripple Effect on Fish Prices

When diesel costs rise for fishermen, the impact flows straight to the consumer.

Fish that arrives at wholesale markets in Selayang or Senawang already carries higher transportation costs. The trawler burned more fuel catching it. The lorry burned more fuel delivering it. The cold chain used more diesel keeping it fresh.

Industry observers have noted wholesale fish prices have climbed 15-25% compared to pre-subsidy rationalization levels. For popular species like kembung (Indian mackerel), selar (yellowtail scad), and prawns, the retail price increases are even steeper because each handler in the chain adds their own cost buffer.

This creates a difficult cycle. Higher fish prices can reduce consumer demand, which means fishermen sometimes return with unsold catch - after spending thousands on diesel.

Where It Hurts Most: The Small Operators

Malaysia has roughly 50,000 registered fishermen and thousands more who work informally. The vast majority are small-scale operators running one or two boats.

These operators face a unique set of challenges:

Cash flow timing is brutal. A fisherman spends money on diesel before knowing what the catch will be. Bad weather, poor catch seasons, or mechanical breakdowns mean the diesel money is gone with little to show for it.

Equipment maintenance gets deferred. When fuel eats up more of the budget, engine servicing, net repairs, and safety equipment upgrades get pushed back. This creates bigger problems down the road - a poorly maintained engine burns more fuel, making the situation worse.

Ice and refrigeration costs also run on diesel. Many fishing boats rely on diesel-powered refrigeration or purchase ice from diesel-powered ice factories. These costs have also risen, compounding the fuel issue.

The SKDS 2.0 Subsidy: Helpful But Not Enough

The government’s SKDS 2.0 targeted subsidy programme does provide relief for registered commercial fishermen. Eligible operators can access diesel at closer to the old subsidized rate.

However, the reality on the ground is more complicated:

Not all fishermen qualify, particularly informal operators
The application and approval process takes time
Quota allocations may not match actual consumption needs
Administrative requirements can be challenging for smaller operators

For many fishermen, especially those running older boats that consume more fuel, the subsidy helps but does not fully close the gap.

Practical Steps Fishermen Are Taking

Across the industry, operators are adapting in several ways:

Choosing Fishing Grounds More Carefully

Captains are being more selective about where they fish, focusing on grounds closer to port to reduce transit fuel consumption. This means more competition in nearshore waters, but it keeps diesel costs manageable.

Coordinating Trips

Some fishing communities are sharing information about fish movements more actively, reducing the number of fruitless trips. When one boat finds a productive area, others can head there directly rather than burning fuel searching.

Maintaining Equipment Properly

Smart operators know that a well-tuned marine engine can use 10-15% less fuel than a neglected one. Keeping propellers clean, hulls smooth, and engines serviced is no longer optional - it is essential.

Upgrading or Replacing Worn-Out Engines

This is where many fishermen get stuck. They know a newer, more efficient engine would reduce fuel consumption. They know their 20-year-old engine is costing them extra every single trip. But replacing a marine engine requires capital they do not have sitting in the bank.

The Equipment Financing Option

This is exactly the situation where equipment financing makes practical sense.

Rather than continuing to burn excess fuel with an old engine, or draining savings to buy a replacement outright, financing allows fishermen to spread the cost over time while immediately benefiting from lower fuel consumption.

The same applies to refrigeration equipment, winches, net haulers, and other gear that keeps a fishing operation running. When cash flow is being squeezed by diesel costs, preserving working capital becomes critical.

At Ing Heng Credit, we have been financing equipment for Malaysian businesses since 1985 - over 40 years of experience. As a KPKT licensed lender, we have helped more than 4,000 customers across various industries, including marine and fishing operations.

We understand that fishing businesses do not always have textbook financial records. We look at the whole picture.

The Bottom Line

Diesel prices are not coming down anytime soon. The subsidy rationalization is part of a broader government policy, and fishermen need to plan accordingly.

The operators who will weather this period best are those who manage their cash flow carefully, maintain their equipment, and make smart decisions about when to invest in more efficient gear.

Ignoring the problem or hoping for a return to RM2.15 diesel is not a strategy. Adapting is.

Need Help Managing Cash Flow?

Cash flow tight with rising diesel costs? We finance equipment for businesses like yours:

Old or used equipment? We finance that
Flexible repayment terms
0% deposit available

WhatsApp: 017-570 0889

Since 1985 - helping Malaysian businesses keep moving.

How Diesel Price Increases Are Squeezing Malaysia's Fishing Industry in 2026