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MALAYSIA’S monthly fuel subsidy burden has surged to about RM5 billion, driven by escalating global oil prices linked to geopolitical tensions in West Asia, placing significant pressure on government finances, Prime Minister Datuk Seri Anwar Ibrahim said today.
The sharp rise marks a substantial increase from the roughly RM700 million monthly allocation when the Budi MADANI subsidy scheme for RON95 petrol was first introduced, underscoring the scale of fiscal strain now confronting the government.
Anwar said the surge was fuelled by higher crude oil prices as well as increased logistics costs, including transportation and insurance, which have compounded the overall subsidy bill.
“If prices surge further, it could exceed RM6 billion. But at current levels, it is RM5 billion a month.
“Imagine, over 10 months, that is RM50 billion from government funds,” he said during a monthly assembly at the Natural Resources And Environmental Sustainability Ministry (NRES) in Putrajaya on Monday.
Anwar urged civil servants to help communicate the fiscal realities facing the country, as authorities balance rising subsidy commitments with broader economic stability.
Despite the government’s efforts to cushion the impact, Anwar acknowledged that inflationary pressures are being felt by households.
“Do we have a problem with living cost? Yes, I am not denying it,” he said.
“Must we manage this wisely? Yes. Can we afford to provide full assistance? I would say partially yes, because we cannot give total help because as you can see, even Budi95 has reached (RM5 billion) a month,” he added.
Even so, the Prime Minister reaffirmed that Malaysia would continue to keep RON95 petrol and diesel prices low, despite the ballooning subsidy bill.
Anwar also stressed that Malaysia remains in a relatively secure position in terms of energy supply, supported by strong diplomatic ties and strategic cooperation with key producers, including Iran, Russia and Turkmenistan.
“We are fortunate. Malaysia is among the countries with secure oil and gas supply. Our good relations with Iran, Russia and Turkmenistan give us supply assurances.
“So, in terms of supply, we have no problem, but the challenge is rising prices beyond our control,” he said.
He noted that ongoing global geopolitical developments and supply chain disruptions are forcing the government to strike a delicate balance between shielding consumers and safeguarding fiscal sustainability.
Citing briefings from crisis management officials, Anwar said longstanding ties with major energy producers, including Uzbekistan, have helped ensure continued supply stability.
“Because we are on good terms with Iran, Malaysia was among the earliest to be given access, after the Iranian President contacted me directly. With Russia, we have good relations.
“With Turkmenistan and Uzbekistan, where we have long-standing ties, we have also been given assurances,” he said.
At the same time, Anwar stressed the importance of managing the impact of rising oil prices carefully to avoid placing undue burden on the public, including maintaining RON95 prices and refining targeted diesel subsidies.
“We have to face oil prices in Malaysia. Malaysia is still maintaining RON95. That is why when I came earlier, I saw people still smiling.
“If RON95 were to increase, I believe those smiles would fade (laughs). So, they are still smiling. We have only reduced it from 300 to 200… (referring to BUDI95),” he said.
As global energy markets remain volatile, Malaysia’s subsidy strategy is expected to remain under close scrutiny, with policymakers navigating the competing demands of economic resilience, fiscal discipline and cost-of-living pressures. - May 4, 2026
