Fuel subsidies in Malaysia

Unity Government and Reform · Debate · 6 min read

RON95 Subsidy Rationalisation: A Necessary Fiscal Reform or a New Burden on Ordinary Malaysians?

Malaysia spent tens of billions subsidising petrol for decades — but who was really benefiting, and who is now paying the price?

For decades, Malaysia subsidised RON95 petrol at a fixed price far below market rates. The bill reached RM80.7 billion in 2022 alone — one of the largest single fiscal commitments in Malaysian history — as global crude oil prices surged. The Madani government introduced targeted subsidies from June 2024: the RM2.05 per litre subsidised price is retained for lower- and middle-income households, while higher-income owners of larger-engine vehicles pay market rates. The core question: is this a long-overdue fiscal correction that redirects money to those who need it most, or does the knock-on effect through transport costs punish the very households the reform was meant to protect?