The Malaysian government is set to introduce a targeted subsidy system for RON95 petrol by mid-2025 to address ongoing subsidy leaks that currently extend benefits to non-citizens and high-income groups.
Deputy Finance Minister Datuk Seri Amir Hamzah Azizan highlighted that around 40% of RON95 usage is linked to non-citizens, the commercial sector, and smuggling activities, resulting in substantial subsidy losses.
“The transition from a blanket subsidy to a targeted model is anticipated to save the government up to RM8 billion each year, with current RON95 subsidies costing an estimated RM20 billion annually,” he announced in Parliament today.
The new subsidy approach will operate through a tiered pricing system, mirroring the structure of existing electricity and diesel subsidies. For instance, higher electricity consumption incurs increased rates, and certain logistics vehicles continue to access diesel at a subsidised rate of RM2.15 per litre, as opposed to the market rate of RM2.50.
Additionally, Amir Hamzah shared that a pilot initiative enabling RON95 purchases via MyKad and e-wallets is underway, aimed at ensuring subsidies reach only those who are eligible.
“We are finalizing criteria to make certain this subsidy genuinely addresses the needs of the rakyat,” he noted.
Under the targeted system, the government will temporarily set pump prices at market rates, while qualifying individuals will receive RON95 at a subsidised price. Comprehensive measures akin to those used in diesel subsidy targeting are being planned to ensure seamless implementation and reassure the public.
This initiative underscores the government’s commitment to helping Malaysians manage living expenses, particularly in the face of rising fuel costs.