It is official: the government confirmed this morning that it will extend the entire Ron95 -Benzine subsidy to all Malaysians. And so the big fight for targeted subsidies – perhaps the center of the current Madani government – has fallen through the road.
To be honest, the new price of RM1.99 per liter will be limited to a quota of 300 liters per month before they return to RM2.60 per liter (floating on the basis of market price), with the exception of registered e-hailing drivers that will receive the lower amount. The use of Mykad verification also discourages foreigners from smuggling subsidized gasoline across borders.
Yet this step is a significant deviation from what was previously announced, in which Prime Minister Anwar Ibrahim said that a subsidy nationalization plan was needed to “optimize national resources for the benefit of people and to reduce the subsidy’s waste.”
The discussions about targeted subsidies started not long after the current government came to power – we first reported about it in December 2022, and even the previous government had considered such a mechanism. Subsidies were then cut for Diesel in 2024, but the rationalization plan for Ron95 gasoline was repeatedly pushed back, first to the second half of 2024, then until half past 2025, then finally until September 2025.
All the while we were convinced that targeted subsidies were needed to “save the country;” That the government had “no choice” that Malaysia should stop giving subsidies to the rich, and that 90% of Malaysians (later 18 million car drivers and motorcyclists) would be eligible, with only the ‘extremely rich’ omitted. Well, that figure is now a full 100%.
The expansion of subsidies to all literal card -bearing Malaysians blinded everyone, including us. Last month it was reported that the ownership of luxury vehicle and real estate would be one of the criteria that determine which people would receive the subsidy and who did not. Even as recently as last Friday, when Minister of the Interior Saifuddin Nasution Ismail Ialisians advised to ensure that their Mykad chip was functional to enjoy the lower Ron95 price, it was clearly stated that the subsidies would still be aimed.
It is worth noting that for all the talk about targeted subsidies needed to reduce the budget deficit, the reduction of the RON95 price of the current level of RM2.05 per liter means that there will be likely more Governments for the government to pay, compared to the current subsidies only in the first place.
And although there is a nominal limit for the amount of gasoline that each person can buy, the quota of 300 liters is much more than one person who can expect to use every month. Not to mention, this quota is exactly the kind of things that a rich person can easily bypass Buy a more fuel -efficient car -something that cannot be said for, for example, a person with a lower income with parent, less efficient transport.
The government has also repeatedly said that this measure will prevent foreigners from benefiting from our subsidies, but it also repeats that foreign cars are not excluded from subsidized fuel, and that foreign citizens who have private vehicles in Malaysia are very little in any case.
Moreover, although the Mykad requirement is a deterrent, it will not completely stop all forms of smuggling, because foreigners can easily ask a Malaysian family member or friend to fill them. All this has completed us, we wonder how much the government expects to save this realistically.
As you can imagine, there are various questions. Firstly, it is quite clear that the government does not have the stomach to burden the super rich. We have already seen the disputed high -quality goods tax (HVGT), so this step is not unprecedented. So, the larger people Pay for this subsidy in other areas?
Simply this morning, even when the news about the expansion of the subsidy broke, The star Reported that on Friday Anwar said that savings of targeted subsidies would be spent on “education, health and basic infrastructure”, including public infrastructure that has been damaged by the current Sabah floods. What happens to those initiatives?
Secondly, it is still not answered whether the requirement of the Mykad verification will lead to long queues at counters of gas stations. We hebben de creditcardterminal in de winkel tot nu toe alleen gezien met de kaartsleuf, en hoewel de overheid heeft gezegd dat At-Pump-terminals en apps voor benzinebedrijven ook in staat zullen zijn om de geschiktheid van een gebruiker te verifiëren, moeten we erop wijzen dat a) niet elke pomp een creditcardterminal heeft, en niet iedereen die een app gebruikt om brandstof te betalen, en b) We hebben nog steeds geen details over hoe deze opties zullen work.
Third, with the RON95 fuel price the lowest since 2019, will the demand for EVs continue to fall? If so, the government will do that to have To expand its current tax incentives as it is to reach its target of EVs to compensate for 15% of vehicle sales in 2030. Except that it cannot afford now, right?
Last but not least, what happens with rationalization of diesel subsidies? The expansion of Ron95 to all Malaysians will seem unfair for those who use diesel vehicles – which, in case you need a refresher course, get RM200 per month only if they are Malaysians with an annual family income of less than RM100,000 (no more than RM8.333 per month) and not a luxury car of the luxury of the luxury of the luxury of the luxury of the luxury of the luxury of the luxury of the luxury of the luxury of the luxury of the luxury of the luxury of the luxury of the luxury of the luxury of the luxury of the luxury of the luxury.
The Mykad verse verification mechanism also seems to be ahead of the rather rudimentary Budi Madani system for targeted subsidies; Will this be upgraded?
Now up to you – what do you think of the expansion of Ron95 subsidies to all Malaysians? Do you agree or disagree with the implementation? Let us know in the responses.
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