Prime Minister Anwar Ibrahim says the government chose targeted subsidies over a floating price mechanism to shield the majority from financial burden.
KUALA LUMPUR: The government has rejected a World Bank-recommended floating price mechanism for fuel, deeming it too burdensome for most citizens.
Prime Minister Datuk Seri Anwar Ibrahim said the chosen policy of targeted subsidies has successfully protected 85% of the population.
He revealed the policy saved RM6 billion on petrol and RM5 billion on diesel subsidies.
The government set the price of BUDI95 at RM1.99 per litre to ensure continued public benefit from fuel consumption.
“The use of (BUDI95) is smooth and orderly,” Anwar told the Dewan Rakyat. He stated it was a success story with 3.1 million daily transactions processed well.
Current usage averages 100 litres monthly per user, well within the 300-litre cap, with 90% not exceeding 200 litres.
Anwar said few countries dared implement such targeted subsidies due to public acceptance risks.
“Firstly, we don’t have much choice because the leakage due to untargeted subsidies is too high,” he explained. The government’s phased approach aimed to protect majority welfare.
A floating price would only exclude assistance for families earning above RM13,000 monthly, with aid provided to all others.
Anwar also noted success in curbing smuggling syndicates to neighbouring countries.
He praised citizens for channelling information about foreigners attempting to buy subsidised RON95.
The targeted RON95 subsidy is projected to save at least RM2.5 billion this year, depending on global oil prices and exchange rates.
These fiscal savings are being redistributed to fund additional public assistance like Sumbangan Asas Rahmah (SARA).
Overall subsidy leakage has dropped significantly since BUDI95’s implementation.
Anwar acknowledged isolated cases persist, particularly in border areas like Rantau Panjang, Tawau and Perlis.
Surveillance and enforcement are now intensified in these high-leakage zones to prevent further revenue loss.
