From RM8b to RM4b? Malaysia to save less via new RON95 fuel subsidy policy, but accepts ‘trade-off’

The changes come after Anwar previously said during his Budget 2025 speech last October that subsidies for RON95 fuel would also be cut for Malaysians in the top 15 per cent (T15) of the country’s income group.

The original proposal was expected to save about RM8 billion annually, he said then, stressing that Malaysia currently spends about RM20 billion a year on fuel subsidies enjoyed by both foreigners and super-rich Malaysians.

Amir Hamzah said on Tuesday that the new move would save the government between RM2.5 billion to RM4 billion a year, if oil prices are at RM75 per barrel.

“If you look at it from the government policy point of view, it’s important that when we do changes, the changes must be easily acceptable to society, and it also needs to reflect the conditions – so, understanding that there are cost of living pressures,” he told reporters at a briefing in Shah Alam on the fuel rationalisation exercise.

He said the government would still achieve its aim of cutting “leakages” in subsidies by removing them for foreigners, deterring the smuggling of cheap Malaysian fuel to other countries, and maintaining its rule of restricting foreign-registered vehicles to the more expensive RON97 petrol.

“There was a trade-off in that process, but this government listens to the noises that we actually see outside, and we are respectful of that portion. So at this juncture, we are happy to actually bank in potential savings of about RM4 billion,” he said.

When asked about criticism that the government was not saving as much as it could, the minister was circumspect.

“Is RM2.5 billion small money? To me, every single dollar saved is worth it, because it’s money that we can use for other means,” he said.

“We either (use it to) reduce the amount of deficit, or we invest back in things that are necessary for the people. So if I get RM2.5 billion or RM4 billion, I’d be very happy compared to not getting anything else.”

Amir Hamzah also said that the government was “on track” in its aim of narrowing the fiscal deficit to 3.8 per cent in 2025, from 4.1 per cent in 2024.