KUALA LUMPUR – The government is in the final stages of developing a mechanism for the rationalisation of RON95 petrol subsidies, which is set to be introduced in the second half of this year.
Finance Minister II Datuk Seri Amir Hamzah Azizan said the plan would adopt a data-driven, technology-enabled approach—similar to the diesel subsidy reforms—by incorporating identification card-based verification at petrol stations to ensure only eligible Malaysians benefit from subsidised fuel, local media reported.
"The philosophy is simple: if you're not eligible, you should pay the full price. Businesses or individuals like foreigners who can afford it should not benefit from subsidies meant for the underprivileged," he said during his keynote address at the Invest Asean-Malaysia 2025 conference.
He emphasised that the objective of the RON95 rationalisation is to eliminate misuse and direct support towards those in genuine need, while maintaining fiscal responsibility. The government is also taking steps to avoid unintended inflationary pressures by supporting sectors that may be affected by the subsidy reforms.
The diesel rationalisation efforts have already shown early signs of success, with diesel supply dropping from 287,000 tonnes to 285,000 tonnes as of June 10. This reduction, Amir Hamzah noted, reflected a decline in misuse and abuse of subsidised diesel.
Under the diesel subsidy structure, the government introduced direct cash assistance of RM200 a month for eligible individuals who meet specific income thresholds and do not own luxury vehicles.
Amir Hamzah also pointed to the Sumbangan Asas Rahmah initiative—benefiting 5.4 million recipients—as a proven model for targeted assistance that may guide the implementation of future programmes.
Highlighting the broader fiscal strategy, he said subsidy rationalisation, along with the expansion of the Sales and Service Tax (SST), is part of efforts to diversify government revenue and ensure more prudent public spending.
"We are targeting a 3.8% fiscal deficit for 2025, down from last year’s 4.1%. The aim is to reach a three per cent deficit in the medium term, in line with the Public Finance and Responsibility Act 2023," he said.
Despite new SST exemptions, the government remains confident that its expansion will generate an additional RM10 billion in revenue this year.
Looking ahead, Amir Hamzah said that Budget 2026 and the 13th Malaysia Plan (13MP), which will be tabled soon, will prioritise continuity and practical responses to current economic challenges, while working towards a fairer society.
He added that a series of reforms are underway to support Malaysia’s long-term growth and governance, including institutional, judicial, fiscal, social protection, and digital transformation efforts.
"Current global volatility makes reforms more, not less, urgent. Institutional strengthening, fiscal discipline, and innovation capacity-building are complements to sustainable, resilient economic expansion that is capable of weathering future global disruptions," he said. - July 1, 2025
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