THE move from a blanket RON95 petrol subsidy to a targeted assistance scheme under BUDI MADANI RON95, or BUDI95, is expected to reduce subsidy leakages and generate annual fiscal savings of between RM2.5 billion and RM4 billion, according to the Finance Ministry.
In a written reply published on the Parliament website today, the ministry said the projected savings are subject to fluctuations in global crude oil prices and exchange rates.
“These savings are not the result of reducing protection for the people, but rather the result of more accurate targeting of subsidies to those who are eligible,” the ministry said.
The reply was in response to a question from Datuk Seri Ismail Sabri Yaakob (BN-Bera) on the total RON95 petrol subsidy following the implementation of subsidy rationalisation at the end of September, and the amount of savings expected from the move.
The ministry explained that retail prices for RON95 petrol continue to be determined under the Automatic Pricing Mechanism, which takes into account global crude oil prices, refining and distribution costs, as well as exchange rate movements.
In the context of subsidy rationalisation, it said the implementation of BUDI95 does not alter the pricing mechanism itself, but instead improves the way subsidies generated under the mechanism are distributed.
This approach, the ministry said, allows the government to better control the growth of subsidy spending, particularly in periods when global crude oil prices are on the rise.
It added that the government remains committed to ensuring that subsidy targeting does not burden the public, while enabling higher allocations for targeted assistance to strengthen a more inclusive social protection network.
The Finance Ministry said these measures would help increase disposable income among the public, delivering positive spillover effects to the broader economic environment in line with the MADANI Economic Framework.
“Since 2023, the government has taken bold steps to implement targeted subsidies, including targeted electricity subsidies, targeted diesel subsidies, the floating of chicken and egg prices, as well as the targeting of RON95 subsidies.
“The floating of chicken and egg prices did not affect supply or price stability in the market,” it said in the written reply.
The ministry was also responding to a question from Mohd Syahir Che Sulaiman (PN-Bachok) on the net impact of subsidy rationalisation on the purchasing power of B40 and M40 households, including administrative costs, leakages and the targeting mechanisms used.
On diesel subsidies, the ministry said fleet card facilities are provided to public transport vehicles and selected goods transport operators, allowing them to continue purchasing diesel at the subsidised price of RM2.15 per litre. In addition, cash assistance of RM200 per month is provided to eligible private diesel vehicle owners, farmers, livestock breeders and smallholders.
For targeted RON95 subsidies, Malaysian citizens aged 16 and above are eligible to purchase RON95 petrol at the subsidised price of RM1.99 per litre. Eligibility under BUDI95 has also been expanded to include registered fishermen, private boat owners in Sabah and Sarawak, e-hailing drivers and airport taxi drivers. - January 29, 2026
