The Perhentian Island Tourism Operators Association said operating costs on the island have risen 50% to 70% in recent months.

It said its members rely on generators daily “to keep basic operations running”, and many of these generators are diesel-powered.

The price of diesel has increased sharply since the Iran war, retailing now at RM 5.12 per litre in Peninsular Malaysia.

“The recent increases are becoming difficult to sustain. We are reaching a point where businesses may have no choice but to pass on costs to consumers or scale back operations,” the association’s chairman, Rafizah Munir, said in a statement.

She warned that the situation, if left unaddressed, could affect the island’s competitiveness and those working in the tourism industry, including hospitality workers, boat operators and small businesses.

The association said a targeted policy approach is needed given the island’s infrastructure limitations and lack of alternative energy sources, adding that it is prepared to work with the ministry on a practical implementation model.

Sabri Hamdan, owner of Crocodile Rock Villas, said subsidies are necessary so long as the island is not connected to a stable national energy supply.