Brace yourselves, Malaysian motorists! Changes are coming to how you fuel up come mid-2025, but the good news is that 85% of Malaysians will continue to enjoy subsidised RON95 petrol. As announced in the 2025 national budget by Prime Minister Datuk Seri Anwar Ibrahim, the government is setting its sights on targeted subsidies, with only a new “T15” category of Malaysians facing a potential price increase.
While this new category might seem to align with the traditional household income classification (B40, M40, and T20), economy minister Rafizi Ramli has clarified that the government will be considering more factors than just gross income where household size, location, and financial commitments will also play a role in determining subsidy eligibility.
While the exact mechanism for the new subsidy system remain unclear, Rafizi has hinted at two possible scenarios, as reported by The Star. One possibility is that RON 95 prices could be floated to match the market price, with savings from the subsidy removal being channelled to targeted groups as monthly cash aid.
RON95 fuel prices are currently hovering around RM2.76 per litre based on fuel prices published by Double Petrol, a non-subsidised petrol station in Perlis. This would mean a significant price hike from the current capped price of RM2.05, increasing upfront fuel costs for all drivers.
Alternatively, the government could implement targeted subsidies, with only those meeting specific criteria paying the lower capped price. To qualify for subsidised fuel, drivers might be required to scan their MyKad identification cards at the pump, with eligibility checks likely relying on a cloud-based database similar to the existing PADU Database, which was introduced earlier this year.
This approach echoes the recent changes to diesel subsidies, which are now disbursed through two separate programmes: the Subsidised Diesel Control System (SKDS) 2.0 for companies and BUDI Madani for agricultural smallholders. This two-tiered system could serve as a model for how RON 95 subsidies might be implemented.
The rationalisation of RON95 fuel subsidies is expected to save the government some RM8 billion in subsidies allocation.
RELATED: Budget 2025: RON95 subsidy rationalisation to begin in mid-2025, 85% of Malaysians unaffected
