“When the RON95 subsidy rationalization takes effect, Malaysians will enjoy a lower fuel price,” Prime Minister Anwar Ibrahim said in a Wednesday announcement, adding that further details will be revealed by the end of September, the New Straits Times reported.
Anwar, who also serves as Finance Minister, explained that foreigners will not benefit from the subsidy and have to pay market rates.
He noted that the move is expected to benefit some 18 million motorists, including young people from the age of 16 and gig economy workers.
In Malaysia, drivers currently pay a fixed rate of RM2.05 per liter of RON95 as the fuel is partially subsidized to keep it affordable for lower-income groups.
“In 2023 and 2024 alone, subsidies for RON95 were estimated to cost nearly RM20 billion annually,” Anwar said.
“Even this year, despite a drop in global oil prices, the unsubsidized price of RON95 remains around RM2.50 per liter, significantly higher than the subsidized rate Malaysians currently enjoy.”
The RON95 price cut is part of a package that aims to ease cost-of-living pressures and soften the impact of an expanded sales and service tax implemented on July 1, according to Bloomberg. The package also includes a one-off cash handout of RM100, set to be distributed starting August 31.
The subsidy plan, originally set for mid-2025 and also intended to exclude the wealthy from the subsidy, previously sparked concerns about potential inflation, particularly when combined with the tax expansion, as reported by the South China Morning Post.
On Wednesday, Anwar sought to allay those fears, stressing that the plan is designed to maintain support for ordinary Malaysians while preventing subsidy leakages to those who do not qualify.
“What’s certain is that just like the approach of targeted electricity subsidies, the government gives its assurance that ordinary citizens won’t be affected,” he said, as quoted by The Star.
