Former Economy Minister Rafizi Ramli has cast doubt on the government’s new targeted Budi95 RON95 subsidy scheme, warning that it may not bring the fiscal savings or fairness the administration expects.
Beginning Sept 30, every Malaysian with a valid driving licence and MyKad will be entitled to purchase up to 300 litres of RON95 petrol a month at RM1.99 per litre, with any additional fuel priced at the market rate of around RM2.60.
The government has presented this as a major reform to rein in ballooning subsidies while protecting citizens from volatile oil prices.
Rafizi said the maths does not add up. At USD67 a barrel and RM4.21 to the dollar, the subsidy is about 60 sen a litre. With Malaysians using 1.3 to 1.4 billion litres of RON95 monthly, the bill still comes to RM10–15 billion a year in 2025–26, only slightly below the RM20 billion spent in 2023–24 when oil averaged USD80.
“The overall bill will not fall as much as anticipated. This is not a major fiscal consolidation,” he said, pointing out that consumption patterns are unlikely to change since every licence holder, regardless of income, receives the same quota.
He also rejected the claim that the new approach is fairer. Wealthier households, he noted, typically have more cars and more licensed drivers, allowing them to claim a greater share of subsidised fuel.
Without income-based targeting, the gap between the better-off and lower-income groups remains. Under the old untargeted system, Rafizi said, T20 families captured 75% more subsidy per ringgit than B40 households, a pattern that is unlikely to be reversed under the new model.
The effects, he added, would mean rural motorists may enjoy small savings from the 6 sen price cut, but urban middle-class families who consume more than 300 litres a month could face higher bills eating into their household budgets.
Rafizi also warned of practical and governance risks. Petrol purchases could become slower if verification requires counter transactions, unless MyKad can eventually be used directly at pumps as confirmed by KPDN.
He cautioned, too, that the system opens the door to leakages, as unused quotas could be resold or diverted to the black market, especially by groups such as e-hailing drivers who have wider access to subsidised fuel.
While he acknowledged that subsidy reform is necessary to strengthen public finances and shield Malaysia from swings in global oil prices, Rafizi argued the chosen approach may fall short of its goals.
The true impact, he said, will only be clear six to twelve months after implementation.
