RON95 Fuel Subsidy

• Gov’t working to ensure RON95 subsidy rationalisation programme won’t result in long queues at the pump

  In Local News / By Anthony Lim / 4 July 2025 12:32 pm / 14 comments

  

  Preparations for the RON 95 petrol subsidy rationalisation programme continue, with the government saying that it is currently working on getting petrol station operators to upgrade their systems to ensure there will be no queues at the pump when the programme – which will utilise MyKad for the necessary verification – is implemented.

  According to second finance minister Datuk Seri Amir Hamzah Azizan, the move will allow the payment system to recognise each customer’s eligibility for the subsidy through his/her MyKad, with the intention being to make the filling process as smooth as it is now, FMT reports.

  “We want to ensure that customers do not experience any significant changes when the fuel subsidy rationalisation takes effect. What we don’t want is for people to have to line up to claim their subsidies when they go to the petrol station as opposed to now when they can complete their transaction in a few minutes,” he said.

  He said he was confident that the government will be able to implement a system – which is likely to be based on a two-tier pricing format – that can be adopted at all petrol stations before the end of the year.

  

  He added that the government’s decision to utilise the MyKad would provide it with an effective mechanism to prevent leakages, citing the successful implementation of the Sumbangan Asas Rahmah (SARA) programme, which had over 5.4 million recipients as of April 1, as an example.

  “More than 4,000 shops already have the SARA system up and running. The amount is loaded through the MyKad system, and the beneficiaries will receive either RM50 or RM100 to shop for essential goods. It’s not beyond reason that we can get the same outcome with the RON 95 targeted subsidy rollout,” he stated.

  Currently, the unsubsidised price of RON 95 as sold by fuel retailer Double Petrol is RM2.58 per litre (July 4), which makes it 53 sen more than the subsidised RM2.05 per litre that has been in place since it was capped by the government in February 2021.

   

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• RON95 petrol subsidy rationalisation paves the way for carbon tax on industries in 2026 – Amir Hamzah

  In Local News / By Gerard Lye / 17 June 2025 3:44 pm / 3 comments

  

  The RON 95 petrol subsidy rationalisation will be the government’s focus this year before a carbon tax is introduced in 2026, according to second finance minister Datuk Seri Amir Hamzah Azizan. First announced during Budget 2025, the carbon tax is not a CO2-based road tax like in other countries, but is targeted at iron and steel, and energy industries, with the revenue being used to fund green research and technology programmes.

  As reported by The Sun, Amir noted that Malaysia must first address the issue of fuel subsidies, particularly those involving the energy sector, before implementing the carbon tax. “As we embark on this transition, we must ensure that no unintended consequences are embedded within our system. For instance, Malaysia has yet to implement a carbon tax as part of its policy framework. While it is scheduled for rollout by 2026, there are important precursor steps we must take,” he said.

  “One major issue is the existing distortions in the system, especially the subsidies provided to the energy sector. A key objective now is to begin scaling back these subsidies. It doesn’t make sense to impose taxes on one side while simultaneously providing subsidies for petrol, diesel and other fuels,” he added.

  Amir also emphasised that subsidy rationalisation is a critical step toward establishing a strong foundation for building sustainable mechanisms and policy frameworks. “As a result, we can expect the introduction of structured measures, including climate action frameworks, robust measurement tools, and ultimately, the implementation of a carbon tax to support these initiatives,” he explained.

  

  “If we want this transition to be sustainable and impactful, the entire system must respond. It cannot be driven by isolated announcements or standalone policies. The challenge for the government is to tie everything together coherently and effectively,” he continued.

  In another related report by NST, Amir explained that market distortions such as blanket subsidies must be addressed before a carbon tax can be implemented. “There are distortions happening within Malaysia’s system today because we have provided blanket subsidies, which is a big issue,” he said.

  “We saw good behavioural change (following the diesel subsidy rationalisation last year). Malaysia was no longer the cheap destination for people to source subsidised fuel for smuggling. We also changed the way diesel is supplied to industries to prevent people from taking fuel meant for the public and using it for commercial operations,” he added

  Yesterday, prime minister Datuk Seri Anwar Ibrahim said the RON 95 petrol subsidy rationalisation programme will proceed as planned, adding that it would not affect 85% to 95% of the population.

   

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• RON95 petrol subsidy rationalisation to proceed, as it will not impact vast majority of people – PM Anwar

  In Local News / By Anthony Lim / 16 June 2025 4:03 pm / 30 comments

  

  Prime minister Datuk Seri Anwar Ibrahim says its RON 95 petrol subsidy rationalisation programme will proceed as planned. He said the government will stand by its decision to implement targeted subsidies for the fuel, as it would impact only a few, The Star reports.

  “There is no issue of raising the price of petrol for the vast majority of up to 85% to 95% of our people. Will we do it? Yes, because subsidy rationalisation is critical for our nation. We want sufficient resources to help the poor, enhance education quality, and provide better public services, including health,” he said.

  He criticised the opposition for creating a negative narrative about the government’s plan for RON 95. “Whatever the opposition says is just a desperate gimmick to show that people are facing hardship. There is more negative news from them when we need encouraging news to propel our economy,” he said.

  The PM’s statement comes in the wake of a more than 9% increase in global crude oil prices following the Israel-Iran conflict. Asked if the conflict and resulting rising global crude oil prices would affect the nation’s economy and government coffers, he told reporters it would not have an adverse impact for now.

  

  “For now, I have discussed this with the secretary-general of the Organization of the Petroleum Exporting Countries (OPEC) and leading players. They are monitoring the situation very closely, but it does not necessarily affect the industry and price mechanism adversely,” he said.

  There is still no indication as to exactly when the RON 95 rationalisation programme will be implemented, but In May, second finance minister Datuk Seri Amir Hamzah Azizan indicated that it will be rolled out in the second half of this year.

  As of now, no concrete details of qualification levels (below T5, T10 or T15) have been revealed, and neither has the exact mechanism for the programme, but Amir Hamzah has said that the latter is likely to be based on a two-tier pricing system with both subsidised and non-subsidised prices, with MyKad determining things.

  Incidentally, the unsubsidised price of RON 95 as sold by fuel retailer Double Petrol is RM2.59 per litre (today, June 16), which makes it 54 sen more than the subsidised RM2.05 per litre that has been in place since it was capped by the government in February 2021.

   

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• Government should not delay the implementation of RON95 petrol subsidy rationalisation, say economists

  In Local News / By Anthony Lim / 16 June 2025 3:19 pm / 8 comments

  

  Economists say that the government should proceed with the implementation of its planned RON 95 petrol subsidy rationalisation despite the recent spike in global oil prices brought about by escalating tensions in the Middle East, The Star reports.

  According to Sunway University economics professor Yeah Kim Leng, implementing the programme without delay will allow the burden of rising oil prices to be shared with consumers and businesses while preventing a ballooning subsidy burden to the nearly RM100 billion incurred in 2020 during the Covid-19 pandemic.

  He said that unless absorbed by the government, higher global oil prices would lead to increased pump prices, putting pressure on national finances. “This would require the government to cut other expenditures or incur a higher fiscal deficit, which will further raise the country’s debt level,” he said, while suggesting that the rollout be accomplished in gradual fashion.

  Echoing that sentiment was economist Geoffrey Williams, who said that higher oil prices would widen the gap between market prices and retail pump prices, increasing the government’s subsidy burden. He added that the government would save at least RM8 billion or more once it was in place, saving that can be redirected to critical areas such as healthcare, education and social protection.

  He said that the rationalisation of diesel and electricity subsidies, which raised RM11.5 billion without triggering hostile market or public reaction. “The government must push through with targeted subsidies now. There is no better time and any delay will signal weakness and damage credibility,” he said.

  

  Elsewhere, Associated Chinese Chambers of Commerce and Industry of Malaysia treasurer-general Datuk Koong Lin Loong agreed that any delay could significantly increase the government’s subsidy bill if oil prices continue to rise. However, he said a phased implementation was necessary.

  “This is to avoid a sudden shock to the nation’s economy, which is already grappling with the current geopolitical uncertainties,” he said. He also called for the Price Control and Anti-Profiteering Unit to be strengthened to prevent businesses from arbitrarily raising prices, potentially driving up inflation.

  Meanwhile, Federation of Malaysian Business Associations vice-chairman Nivas Ragavan stated that the timing of the rollout is crucial. “Volatile oil prices can exacerbate the burden on the rakyat if not carefully managed, but a sudden implementation during a price spike could be highly inflationary and politically sensitive,” he said.

  Earlier this month, the Petrol Dealers Association of Malaysia (PDAM) urged the government to delay introducing the RON 95 petrol subsidy rationalisation plan until critical industry issues were resolved.

  Incidentally, the unsubsidised price of RON 95 as sold by fuel retailer Double Petrol is RM2.59 per litre (today, June 16), which makes it 54 sen more than the subsidised RM2.05 per litre that has been in place since it was capped by the government in February 2021.

   

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• Gov’t should delay RON95 subsidy rationalisation until dealer margin, MDR issues resolved, says PDAM

  In Local News / By Gerard Lye / 3 June 2025 12:38 pm / 13 comments

  

  The Petrol Dealers Association of Malaysia (PDAM) has urged the government to delay introducing the RON 95 petrol subsidy rationalisation plan until critical industry issues are resolved, reports FMT.

  PDAM president Khairul Annuar Abdul Aziz said dealer margins, which are fixed under the automatic pricing mechanism (APM), had not been revised since 2019 and no longer reflected current operating costs. Additionally, he voiced concern over the merchant discount rate (MDR) imposed on card payments, which increases as fuel prices rise but leaves dealers’ per-litre commissions untouched.

  “Without a margin revision, small and medium-volume station operators will face losses from the very first day of the RON 95 subsidy rationalisation implementation. And as pump prices increase under the rationalisation, the MDR rises accordingly, but dealer commissions remain static, resulting in a further erosion of margins,” he said in a statement. PDAM represents over 4,000 petrol stations nationwide and had previously voiced similar concerns last year (Facebook post attached below).

  The RON 95 petrol subsidy rationalisation plan is set to be implemented in the second half of 2025, as revealed by second finance minister Datuk Seri Amir Hamzah Azizan a few days ago. A few days before that, former economic minister Rafizi Ramli said the plan had been fully handed over to the finance ministry.

   

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• Rafizi Ramli resigns as economic minister – so what happens to RON95 targeted subsidies and PADU now?

  In Local News / By Mick Chan / 28 May 2025 3:47 pm / 18 comments

  

  Datuk Seri Rafizi Ramli has resigned from his position as the minister of economy of Malaysia, following his loss in the recent PKR party election for the position of deputy president to Nurul Izzah Anwar.

  “I have submitted my resignation letter to the prime minister. My defeat in the recent PKR election means I no longer have the party’s mandate to translate the people’s agenda, as championed by PKR, into government programmes,” Rafizi said in a statement.

  The Pandan member of parliament added that his resignation from the economy minister post will take effect on June 17, and he will take the remainder of his annual leave from today until June 16.

  During Rafizi’s tenure as economy minister, the ministry launched the Pangkalan Data Utama (PADU) socio-economic database in January 2024. Initially defined as a key component in determining how subsidies and financial assistance were re-targeted, the database – which cost RM85 million to implement – was utilised for the rationalisation of diesel subsidies in June 2024, but has since largely gone off the radar.

  

  Despite Rafizi having stated last November that there would be a second phase of registration for PADU in preparation for the implementation of the targeted RON 95 petrol subsidy, the government’s decision to go with MyKad in the planned implementation likely means that PADU no longer plays a key role in defining how targeted petrol subsidy will be dispensed.

  On May 19, Rafizi announced that the RON 95 petrol subsidy rationalisation plan had been fully handed over to the finance ministry, and that the MoF would be managing the entire RON 95 subsidy process from now on.

  Earlier this week, second finance minister Datuk Seri Amir Hamzah Azizan said that the RON 95 subsidy rationalisation will be rolled out in the second half of this year as planned. Prime minister Datuk Seri Anwar Ibrahim has however said that the majority of the rakyat will not be affected by the move, and that only a select few (which Anwar was said to have mentioned as the 5% ultra rich) and foreigners would be paying more for RON 95.

   

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• Gov’t will implement RON95 subsidy rationalisation as planned, second half of 2025 roll-out – Amir Hamzah

  In Local News / By Danny Tan / 26 May 2025 6:04 pm / 38 comments

  

  The Madani government will implement the RON 95 subsidy rationalisation as planned, and it will be rolled out in the second half of this year, second finance minister Datuk Seri Amir Hamzah Azizan said.

  The senator said that discussions about RON 95 subsidy rationalisation are still ongoing at the cabinet level to detail the best mechanism for a full roll-out that’s fair to the rakyat, BH reported.

  “The prime minister (Datuk Seri Anwar Ibrahim) and the cabinet have discussed, where we will raise the eligibility level to receive subsidies. The second thing is the mechanism that will be used – as announced by the PM, we will use the identity card, and every Malaysian citizen has one,” he said after officiating the MIA International Accountants Conference 2025 in KL today.

  

  Amir Hamzah reiterated that MyKad is the way to go. “We have already used the identity card for the SARA (Sumbangan Asas Rahmah) scheme, and it works. So for now, the finance ministry is tightening the system so that we can use it for RON 95 subsidy implementation,” he added.

  This comes after the PM was quoted as saying that the government guarantees that the price of RON 95 will not be raised for the rakyat, although the matter was discussed by the cabinet. Anwar said that there was a push for the RON 95 price to be raised, but he did not agree with the proposal.

  “I’m thinking of the RON 95 petrol subsidy issue. Some have asked for the price to be increased for the rakyat. However, I don’t agree. If it is to be done, RON 95 price adjustment (the amount of subsidy) has to go down bit by bit according to timing and market price,” the PKR president said in his winding up at the party’s congress in Johor over the weekend.

  

  However, foreigners will have to pay more for fuel. “Foreigners enjoy RM3-4 billion in subsidies. Maybe after this, to buy RON 95 petrol, one will have to show his identity card,” Anwar said, stressing that the pump price for around four million foreigners in Malaysia has to be raised.

  So, looks like it’s still on, and when the PM mentions rakyat, it excludes the T15s – we should’ve known, because in his books, those are the ‘maha kaya’. In any case, RON 95 subsidy rationalisation is no longer under the economy ministry and Datuk Seri Rafizi Ramli, and the MoF is in charge now.

   

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• Gov’t won’t increase RON95 price although cabinet discussed it, but foreigners to pay more – PM Anwar

  In Local News / By Danny Tan / 26 May 2025 11:10 am / 28 comments

  

  No RON 95 price increase for Malaysians? Here’s the latest on the RON 95 fuel subsidy rationalisation plan that was supposed to start in mid 2025, which we’re approaching now.

  The government guarantees that the price of RON 95 will not be raised for the rakyat, although the matter has been discussed by the cabinet, Sinar Harian says. Prime minister Datuk Seri Anwar Ibrahim said that there was a push for the RON 95 price to be raised, but he didn’t agree with the proposal.

  “I’m thinking of the RON 95 petrol subsidy issue. Some have asked for the price to be increased for the rakyat. However, I don’t agree. If it is to be done, RON 95 price adjustment (the amount of subsidy) has to go down bit by bit according to timing and market price,” the PM said in his winding up speech as PKR president at the party’s congress in Johor.

  

  However, foreigners will have to pay more for fuel. “Foreigners enjoy RM3-4 billion in subsidies. Maybe after this, to buy RON 95 petrol, one will have to show his identity card,” Anwar said, stressing that the pump price for around four million foreigners in Malaysia has to be raised.

  Is Anwar disowning the fuel subsidy rationalisation plan? Last week, economy minister Datuk Seri Rafizi Ramli said that the plan has been handed over to the finance ministry, which Anwar heads, and the responsibility for it no longer falls under his ministry’s jurisdiction.

  “This was the decision of the cabinet. From the ministry of economy’s side, we have brought this matter to the cabinet four times, and the current position is to await action from the finance ministry. They will be managing the entire RON 95 subsidy process from now on. We must wait for their official announcement. It is best to get more details from them,” Rafizi said.

  

  Both the stories match, which likely means that the ‘some’ in Anwar’s speech refers to Rafizi. This raises some questions. Surely, the Pandan MP wasn’t working on a ‘pet project’ and subsidy rationalisation is the Madani government’s direction, with the assignment (given by the boss) getting full buy-in from everyone involved?

  By the way, Rafizi has just lost his PKR deputy president post to Nurul Izzah Anwar, the PM’s daughter, and there have been rumours of his resignation from the cabinet.

  Anyway, if PMX wasn’t misquoted, T20s – unfairly labelled as maha kaya – need not ditch ICE for EVs en masse as they too are part of the rakyat, and will continue to enjoy subsidised RON 95.

   

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• Economy ministry has handed over RON95 fuel subsidy implementation to finance ministry – Rafizi

  In Local News / By Anthony Lim / 20 May 2025 10:42 am / 11 comments

  

  The economy ministry says that the RON 95 petrol subsidy rationalisation plan has been handed over to the finance ministry. According to economy minister Rafizi Ramli, the responsibility for the targeted fuel subsidy no longer falls under his ministry’s jurisdiction, the New Straits Times reports.

  “This was the decision of the cabinet. From the ministry of economy’s side, we have brought this matter to the cabinet four times, and the current position is to await action from the finance mInistry. They will be managing the entire RON 95 subsidy process from now on. We must wait for their official announcement. It is best to get more details from them,” he said.

  Rafizi had previously explained that the petrol subsidy rationalisation will be implemented in two phases.
  The first is a front-end phase involving operational execution at petrol stations, while the second is a back-end phase involving eligibility determination for recipients in the lower 85% income group.

  He said that the back-end processes will still be handled by his ministry, and eligibility determination was to be handled by the economy ministry before being submitted to the cabinet for final approval.

  

  The government previously indicated that it plans to introduce targeted RON 95 subsidies sometime in the middle of this year, but has said recently that it will take into account the current economic situation when deciding on the implementation

  No details of the rationalisation plan have been revealed. Up to March, the government had yet to define how it would establish eligibility for targeted subsidies as well as define a mechanism despite having reviewed four proposals.

  Finance minister II Datuk Seri Amir Hamzah Azizan has however indicated that the mechanism would be based on a two-tier pricing system with both subsidised and non-subsidised prices, with MyKad determining things.

   

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• Gov’t should postpone implementation of RON95 targeted subsidy, electricity tariff hike – Hamzah

  In Local News / By Anthony Lim / 6 May 2025 11:06 am / 12 comments

  

  The government has been urged by lawmakers to postpone its plans to introduce RON 95 subsidy rationalisation and other fiscal reforms such as the move to increase electricity tariffs given the uncertainty in the global economy, The Star reports.

  Bersatu deputy president Datuk Seri Hamzah Zainudin said that any policy changes, especially fiscal measures that could put pressure on costs, weaken business sentiment and ultimately burden consumers should be deferred for the time being.

  “The rationalisation of RON95 subsidies in June this year should be put on hold, if possible, and the same goes for the hike in electricity tariffs in July,” he said in parliament.

  

  Bagan MP Lim Guan Eng voiced a similar tone, saying that the floating of RON 95 prices to match market rates should also be delayed, as should the hike in electricity tariffs. He added that the recent announcement to defer the expansion of the sales and services tax (SST) scope from May 1 was a welcome move.

  The government is scheduled to introduce targeted RON 95 subsidies in the middle of the year, but there has been a lack of clarity so far over the implementation mechanism that will be used. Up to March, the government had yet to define how it would establish eligibility for targeted subsidies as well as define a mechanism despite having reviewed four proposals.

  However, that same month, finance minister II Datuk Seri Amir Hamzah Azizan said that the mechanism would be based on a two-tier pricing system with both subsidised and non-subsidised prices, with MyKad determining things.

   

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• Johor, federal gov’ts committed to ensuring subsidised RON95 petrol goes only to Malaysians

  In Local News / By Jonathan James Tan / 8 April 2025 10:58 am / 10 comments

  

  The Johor and federal governments are committed to making sure subsidised RON 95 petrol is accessible only to Malaysian citizens, reports Bernama.

  According to Johor chief minister Datuk Onn Hafiz Ghazi, his team will not compromise on any non-compliance that could undermine the rights of the people, and strict action would be taken against any party found selling RON 95 petrol to foreign vehicle owners.

  “I, together with the state investment, trade, consumer affairs and human resources exco Lee Ting Han and enforcement officers from the Johor branch of the ministry of domestic trade and consumer affairs (KPDN) have conducted inspections at several petrol stations around Johor Bahru.

  

  “The inspections were conducted to ensure that the sale of RON 95 petrol complies with the regulations and is not misused by (owners of) foreign-registered vehicles,” he said.

  “In this operation, we examined the compliance of petrol station operators with the ban on selling RON 95 to foreigners and ensured that the price charged did not exceed the ceiling price of RM2.05 per litre.

  “The limit for diesel refuelling of 20 litres for foreign vehicles within a radius of 50 km from the border was also checked to ensure full compliance with the regulations,” he added.

  

  The chief minister said these efforts would be continued consistently to protect the people’s rights and ensure the subsidies go only to those who deserve them.

  “If there are any irregularities or violations of regulations, users can submit complaints through the KPDN e- Complaint Portal. Each complaint will be investigated and appropriate action will be taken. Hopefully, this step can curb the leakage of subsidies and provide the benefits that the people deserve,” he said.

  The Petrol Dealers Association of Malaysia (PDAM), however, believes the foreigners should be penalised instead of the dealers. “The dealers do not want to sell RON 95 to foreigners. The profit margin in such transactions is minimal, so it’s not practical or worthwhile to break the law,” communication and media secretary Gordon Lim said in January. Your thoughts?

   

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• Anwar says 90% of Malaysians won’t be affected by targeted RON95 subsidy, only foreigners, the wealthy

  In Local News / By Gerard Lye / 28 March 2025 5:51 pm / 62 comments

  

  Prime minister Datuk Seri Anwar Ibrahim has said the rationalisation of the RON 95 fuel subsidy won’t affect the majority of the population, reports NST.

  “I don’t believe ordinary citizens need to worry or be impacted, regardless of the methods introduced in the RON 95 rationalisation issue. Do not pay attention to rumours; even during the fasting month, when concerns arise about increases in electricity tariffs, I want to reassure everyone that such increases will only affect the wealthy,” said Anwar.

  “The same applies to RON95. In fact, our study shows that it is not 85%, but 90% of the population who will remain unaffected. Those who will be impacted are foreigners and the extremely wealthy. If someone earns RM50,000 a month, they should be expected to contribute a little more,” he added.

  

  Yesterday, second finance minister Datuk Seri Amir Hamzah Azizan revealed that more than 85% of the people will benefit from subsidised RON 95 petrol. He added that subsidy mechanism will be based on a two-tier pricing system, with the MyKad being used to determine the amount that users will pay at pumps.

  The restructuring of RON 95 petrol subsidy from a blanket to targeted approach was announced during the tabling of Budget 2025 by Anwar, who said the change will take place in mid-2025. At the time, he said the subsidy bill was RM20 billion a year to keep the price of RON 95 at RM2.05 per litre, and moving to targeted subsidies would incur savings of RM8 billion.

  “I need to remind everyone that it is better for this RM8 billion to be channeled into education facilities, healthcare and public transport,” Anwar, who is also the finance minister, told reporters today after performing Friday prayers in Shah Alam.

   

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• RON95 fuel subsidy mechanism to use MyKad, two-tier pricing system; over 85% will benefit – Amir Hamzah

  In Local News / By Danny Tan / 27 March 2025 3:43 pm / 55 comments

  

  How are they going to implement it, everyone asked. The answer is MyKad. Finance minister II Datuk Seri Amir Hamzah Azizan said that the RON 95 fuel subsidy mechanism will be based on a two-tier pricing system, and your identity card will determine if you pay a subsidised petrol price later this year.

  “As I have answered multiple times in the Dewan Rakyat and Dewan Negara, the mechanism is still being refined. We do not want to pre-announce something while we are still working on it because the most important thing is to ensure that the system is robust,” he said today at the launch of the Rapid KL On-Demand open payment system in KL, reported by NST.

  “We will use a two-tier pricing system, with both subsidised and non-subsidised prices. More than 85% of the people will benefit from the subsidised price,” the senator added.

  

  Amir said the system will be utilising MyKad. “For those who are not familiar with the process, the Sumbangan Asas Rahmah (Sara) assistance programme, we have the recipients receiving RM100 or RM50 per month, where they can purchase goods at retail stores or supermarkets using MyKad. Currently, we have 700,000 recipients and starting next week, this number will increase to 5.4 million people who will benefit from it.

  “There are currently over 3,500 retail stores and supermarkets that support this MyKad system for Sara’s assistance. So, when we compare, if we can use MyKad for 5.4 million recipients with 3,500 stores, it’s not that different and we could also use the same system for RON 95,” Amir explained.

  Prime minister Datuk Seri Anwar Ibrahim announced the restructuring of RON 95 petrol subsidy from blanket to targeted in the tabling of Budget 2025, and said that change will take place in mid-2025. The PM said that Malaysia spends RM20 billion a year in petrol subsidies to keep the price of RON 95 capped at RM2.05 per litre, and moving to targeted subsidies would save the government RM8 billion.

  

  The targeted petrol subsidy was to exclude the top 15% earners in the country, or T15, though the prime minister has since walked back on the definition of T15, which according to some definitions is household income of RM12,000 or RM13,000.

  Now, Amir Hamzah says that 85% of the rakyat will benefit, which goes back to the T15 yardstick. MyKad-based two-tier pricing aside, the other methods to channel subsidy that have been floated before include direct cash transfer and vehicle type discrimination – we take a look at the pros and cons of all three methods here. What do you think of the government’s chosen approach?

   

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• T15 fuel subsidy criteria may push consumers to downgrade vehicles or switch to EVs – MIDF Research

  In Local News / By Mick Chan / 25 March 2025 11:05 am / 43 comments

  

  The proposed T15 income bracket criteria for the RON95 fuel subsidy that is to be finalised by the middle of this year may drive consumers to downgrade their vehicles or change to electric vehicles, according to MIDF Research, reported Bernama.

  The upcoming change in policy may influence buyers to lower-cost internal-combustion engined vehicles or switch to EVs, the latter particularly before the tax exemptions for fully imported (CBU) EVs expire at the end of this year.

  “Meanwhile, the auto sector’s revised excise duty has been extended, which will expand duties on completely knocked down (CKD) components. The tax, set to be effective January 2026, is expected to drive CKD car prices up by 10% to 30%,” said MIDF Research.

  

  Last week, economists voiced support for a two-tier pricing structure for RON 95 petrol instead of cash aid, and said that charging for the fuel by vehicle type would not stop the wealthy from purchasing subsidised RON 95 petrol while driving more affordable cars.

  When announced at the tabling of Budget 2025, prime minister and finance minister Datuk Seri Anwar Ibrahim said that the upcoming cut in RON 95 petrol subsidy would see the nation’s top 15% of earners pay more for the fuel.

  With no elaboration on who exactly constitutes the T15, many searched and found statistics that pointed to RM12,000 or RM13,000 income as the point where a Malaysian household is classified as T15. For a working couple, that is RM6,000 salary each. Anwar has since walked back on his T15 definition.

   

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• RON95 petrol: two-tier pricing better than cash aid, to ensure subsidy reaches eligible groups – economists

  In Local News / By Mick Chan / 21 March 2025 6:59 pm / 14 comments

  

  Economists have voiced support for a two-tier pricing mechanism for the upcoming RON 95 petrol targeted subsidy, saying that the method is better than cash assistance, Free Malaysia Today has reported.

  “A well-structured two-tiered pricing model, supported by MyKad or e-wallet verification, can help to streamline subsidy distribution while minimising operational disruptions. With MyKad or an e-wallet system, individuals receive their subsidies at the point of purchase, ensuring that only those who are eligible benefit,” said Tan Peck Leong of Universiti Teknologi Mara.

  The system ensures that only eligible individuals have access to subsidised fuel while minimising financial leakage to higher-income groups, making it an effective way of implementing targeted subsidies, Tan said. This will also enable the government to introduce a subsidy cap for better control of expenditure while providing support to those who need it most, he added.

  Meanwhile, economist Geoffrey Williams was quoted as saying that tiered pricing is by far the best approach for implementing the targeted subsidies for RON 95 petrol, and said that “other methods are flawed”.

  

  Williams said that tiered pricing would allow subsidised purchases for small volumes, and non-subsidised purchases for large volumes, however he disagreed with the decision to use MyKad or other forms of identification to verify as the method could lead to fraud.

  “The MyKad and e-wallets can be cloned, sold or traded to get the subsidies. The simpler method is to charge subsidised prices in low volumes and remove the subsidy in stages for higher volumes sold at point of sale,” Williams said, adding that vouchers will lead to a black market for the trade of vouchers, and charging by vehicle type would not stop the wealthy from purchasing subsidised RON 95 petrol while driving more affordable cars.

  A tiered pricing system may be better for handling inflation, especially if it is staggered over multiple levels or introduced slowly over time, Williams added. “This is because it does not introduce the price change across the board and can be spread out,” he said.

  In February, domestic trade and cost of living (KPDN) minister Datuk Armizan Mohd Ali said that the rationalisation of RON 95 petrol that will be carried out by the middle of this year will use the mechanism that ensures its benefits reach the intended groups and correct people.

   

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