THE government expects to save between RM2.5 billion and RM4 billion annually through its targeted RON95 petrol subsidy scheme, BUDI95, once its impact is fully measured from 2026 onwards, Deputy Finance Minister Lim Hui Ying told the Dewan Negara on Tuesday.
The saving, driven by the removal of subsidies for non-citizens and commercial users, is intended to strengthen national welfare and essential public services.
Responding to a query raised by Senator Dr Lingeshwaran Arunasalam, the ministry outlined the early results of BUDI95, which began its phased rollout on 27 September 2025 with members of the Armed Forces and Royal Malaysia Police, followed by Sumbangan Tunai Rahmah (STR) recipients a day later.
The programme was extended to all eligible Malaysian citizens on 30 September.
To date, 13.9 million Malaysians – more than 84 per cent of an estimated 16.5 million eligible individuals – have benefited from the subsidised price of RM1.99 per litre for RON95 petrol.
This accounts for RM5.16 billion in sales, equivalent to 2.59 billion litres consumed between the programme’s launch and 30 November 2025.
The ministry said savings were projected based on data showing roughly 20 per cent of RON95 consumption prior to BUDI95 had been by users who did not qualify for subsidies.
Global crude oil price scenarios between US$60 and US$80 per barrel were also factored into the estimate.
“As the targeted subsidy mechanism only commenced on 30 September 2025, full-year fiscal savings can only be assessed from 2026,” Lim noted.
Throughout the remainder of 2025, the government will focus on refining the BUDI95 system to ensure stability, user friendliness and a reduction in subsidy leakage.
The Senate was told that the fiscal space generated from BUDI95 and other targeted subsidy reforms will be channelled directly into priority sectors.
Beginning in 2026, allocations will be strengthened across welfare, cost-of-living support, education and public transport, including; Sumbangan Tunai Rahmah (STR) and Sumbangan Asas Rahmah (SARA), with funding rising from RM10 billion in 2024 to RM15 billion in 2026.
This includes a one-off RM2 billion Penghargaan SARA payment benefiting around 22 million Malaysians aged 18 and above.
Other areas comprise of the increased social welfare allocations under the Social Welfare Department (JKM), exceeding RM3 billion and RM1 billion for cost-of-living initiatives, including RM600 million for the Jualan Rahmah MADANI programme.
More than RM794 million will be spent for the Back-to-School Assistance Programme (BAP), while RM216 million is likely to be allocated for the My50 monthly travel pass for Klang Valley commuters and around RM200 million for the 30-Day Pass and concession cards under BAS.MY, which will be expanded to other states including Sabah and Sarawak.
Lim said the targeted subsidy approach ensures that national resources are directed towards long-term social and economic priorities.
“In conclusion, the savings derived from subsidy targeting enable the government to allocate more funds towards welfare programmes, cost-of-living support, education, healthcare and the development of quality public infrastructure,” it said. -December 2, 2025
