When the government announced that every Malaysian would get a subsidy of RON95 up to 300 liters per month at RM1.99 per liter from 30 September 2025, many questions arose: is that enough for daily transport needs? If it is not enough, what is the strategy so that the people are not burdened during the rising cost of living? This article will explore the data, challenges, and alternative schemes to make subsidies truly effective and equitable.
Starting September 30, 2025, Malaysia will launch the Budi Madani RON95 (BUDI95) program. Under this program:
- The price of RON95 is subsidized at RM1.99 per liter for Malaysians provided they have a MyKad and an active driving license. (Ministry of Finance Malaysia)
- Everyone gets a quota limit of 300 liters per month for subsidized use. (eCentral.my)
- E-hailing guides are exempt from the quota limit and can apply for additional subsidies to support their work. (eCentral.my)
- Non-Malaysian citizens or unqualified vehicles will have to pay the market price, estimated at ~RM2.60 per liter. (Ministry of Finance Malaysia)
- The government estimates that this move will save the state subsidy burden of around RM2.5 to RM4 billion per year, compared to the initial estimate of RM8 billion. (Reuters)
This move is part of the subsidy reform previously discussed in the 2024 Budget and the old subsidy rationalization discourse that envelopes enormous state spending. (ISEAS-Yusof Ishak Institute)
According to Prime Minister Anwar Ibrahim, the limit of 300 liters per month was set based on the results of a study by the Malaysian Department of Statistics which showed that more than 99% of private vehicle owners do not use more than that amount in a month. (DagangNews - Your Business News)
In his announcement, PM Anwar said that the average usage of citizens is between 100-200 liters per month, and it is very rare for users to exceed the 250-liter mark except in special cases. (Malaysiakini)
To understand the adequacy of 300 liters, we need to see how much the average citizen consumes depending on the type of vehicle and mobility pattern:
- If the car travels an average of 10–12 km per liter (a conservative estimate for a typical vehicle), then with a 300-liter one can travel about 3,000 km per month. For many daily commuters to and from major cities or suburbs, this figure can be sufficient, unless they make a long weekly trip (e.g. to a village, out-of-town tours).
- Motorcycles & small vehicles for motorcycle users, consumption is much smaller, so the 300-liter limit is an "expert" in most cases. However, because the limit is per-individual (not per-vehicle), if family members have multiple vehicles, the distribution of subsidies may feel uneven.
- Long-distance or inter-regional drivers Those who hitchhike long distances, or perform tasks outside of town (including fieldwork, distribution, venture) may quickly cross that limit. For them, 300 liters can run out quickly.
Thus, for regular users within city limits and daily routes, 300 liters can be sufficient. But for users with intensive usage patterns, especially outside of cities or across states, that limit may feel "narrow."
As an example of a simulation:
- If a person uses a sedan with an average efficiency of 12 km/liter, and does 40 km a day (20 km one way + 20 km home) for 26 working days: Usage = (40 km × 26 days) / 12 ≈ 86.7 liters per month
- If an additional holiday/weekend trip for example 200 km (one appearance) = an additional ~17 liters is used up
Total monthly consumption ≈ ~104 liters. That is, in these conditions, 300 liters appear to be “much more than enough.”
But in extreme cases: a long route of 100 km a day for work, then consumption = (100 × 26) / 12 ≈ 217 liters, plus vacation => can be close to the limit of 300 liters. Here the margin is a bit thin but likely enough.
In conclusion: for normal city users, the 300-liter subsidy is very tolerant. But for heavy or cross-region use, many users will be close to the limit, and discomfort arises.
The quota-based subsidy system is vulnerable to manipulation. There is a potential for users to "collect" the use of subsidies at the beginning of the month or misuse identities. In order to mitigate, the government linked the subsidy to MyKad verification & daily monitoring systems at petrol stations. (Ministry of Finance Malaysia)
Some observers note that this policy could exclude residents who do not regularly fill up at large stations or in remote areas where MyKad scanners are less available. (South China Morning Post)
Although the subsidies are targeted, the financial burden of the state is still significant. Previously, subsidies for fuel, food, and others had burdened the state budget for years. (ISEAS-Yusof Ishak Institute)
According to a Reuters report, the government estimates the savings from this policy to be around RM950 million per year, lower than initial estimates. (Reuters)
Some ISEAS analysts noted that the rationalization of subsidies is an important step so that the country does not continue to be trapped in the burden of subsidies that erode fiscal capacity. (ISEAS-Yusof Ishak Institute)
However, criticism has emerged that most of the subsidies provided so far have been used more by high-income groups, who often use large cars and fill a lot. So, this targeting is considered necessary so that subsidies become fairer. (Malay Mail)
Instead of one uniform limit of 300 liters for all, the government could consider a tiered subsidy system:
- Basic tier – for example 200 liters full free.
- Intermediate tier – partial subsidy of up to an additional 100 liters.
- High/special tier – for intensive users such as field officers, drivers between many regions, with additional requirements.
With this scheme, ordinary users are still safe, and the state load can be controlled more tightly.
The use of digital systems (IoT, applications, real-time monitoring) can monitor subsidy consumption by individuals transparently. Fuel stations must be equipped with MyKad scanners/identity verification systems, and the public can check the rest of their daily subsidy through the official app.
To encourage efficiency, the government can provide extra subsidy incentives or discounts for low-emission vehicles, electric or hybrids. For example, they can get access to "additional quotas" if they meet efficiency standards.
To ensure that gasoline subsidies are not the only "outlet," long-term policies must strengthen public transportation trains, buses, local micro transportation so that people are less reliant on private vehicle use.
Improving rail networks, priority bus lines, ticket subsidies, and integration of transportation modes can reduce the burden of personal fuel.
The 300 liters per month petrol subsidy in the BUDI95 program is an ambitious move by the Malaysian government to make the subsidy fairer and more controlled. For most city dwellers with normal mobility patterns, the boundary seems safe and even loose. But for intensive users — those who travel long distances regularly or work interstates, that limit can be stressful.
For these subsidies to truly liberate the people, instead of creating new conflicts, it is necessary to have flexible data-based schemes, tier systems, transparent digitalization, and investment in mass transportation. If the government can combine these measures, these subsidies are not just a momentary "gift", but the foundation of social justice and long-term sustainability.
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