THE government expects to save between RM2.5 billion and RM4 billion a year following the introduction of RON95 petrol subsidy rationalisation in September, Prime Minister Datuk Seri Anwar Ibrahim has revealed.
Anwar, who also serves as Finance Minister, said the estimate is based on domestic consumption patterns and the assumption that roughly 20 per cent of current RON95 usage comes from consumers who are not eligible for subsidised fuel.
He explained that the projected savings also considers various crude oil price scenarios, ranging from USD60 to USD80 per barrel, as well as the removal of subsidies for non-targeted segments, including foreign nationals and commercial users.
“While addressing subsidy leakages, the government’s approach of targeted subsidies has the advantage of preventing a sharp rise in inflation, compared with raising the price of RON95 to market rates for everyone,” he said in a written reply to Pandan MP Datuk Seri Rafizi Ramli on the estimated annual cost savings and system expenses involved in implementing the subsidy rationalisation.
“Through this targeted subsidy approach, the inflation rate is expected to remain below two per cent for 2025 and 2026.
“Additionally, targeted subsidies help with living costs by accommodating different levels of RON95 usage among the people, partly because they travel varying distances between their homes and workplaces,” he added.
Anwar stressed that the government remains committed to practising prudent and responsible fiscal management. He emphasised that subsidy rationalisation is not a measure that will increase national debt; instead, it is an important strategy to reduce long-term liabilities, stabilise the country’s fiscal position and strengthen investor confidence in Malaysia’s economic prospects.
“The savings from targeted subsidies will be used for the well-being of the people and to finance the development of education, healthcare and public transport facilities.
“The restructuring of RON95 subsidies is among the government’s initiatives to ease the public’s burden, while enhancing spending efficiency and improving the allocation of the nation’s financial resources,” he said. - December 5, 2025
