Citizens Get RON95 Petrol at RM1.99 from Sept 30

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RON95 Subsidy For All What About Cost Cuts?

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Estimated reading time: 8 minutes

Key Takeaways

  • The government has unexpectedly extended the full RON95 petrol subsidy to all Malaysians, setting the price at RM1.99 per litre for up to 300 litres monthly.
  • This move starkly contrasts previous commitments to targeted subsidies, which aimed to "optimise national resources" and "reduce subsidy waste."
  • Questions arise regarding the impact on national savings, the government's stance on taxing the wealthy, the future of public initiatives (education, health), and the demand for Electric Vehicles.
  • The implementation raises concerns about potential queues at petrol stations due to MyKad verification and the fairness to diesel vehicle users who still face targeted subsidy mechanisms.
  • The policy shift suggests a significant re-evaluation of economic priorities, leaving many to ponder the broader implications for fiscal responsibility and equitable wealth distribution.

Table of Contents


From Targeted to Universal: A Policy U-Turn?

Is it possible to "optimise national resources" and "reduce subsidy waste" by extending benefits to everyone, including the rich? This morning, the government confirmed a significant policy shift: the full RON95 petrol subsidy will now extend to all Malaysians. This move, which blindsided many—including us—effectively sidelines the previously central agenda of targeted subsidies, a cornerstone of the current administration's economic narrative. For years, we were assured that rationalising subsidies was essential to "save the country," ensuring benefits reached those who truly needed them, not the "extremely wealthy." Yet, here we are: a full 100% of Malaysians are now eligible. This unexpected turn leaves a crucial question hanging in the air: Everyone gets full RON95 subsidy. But what happened to promises of cutting costs and taxing the rich? Explore the economic policy shift and its implications. This article delves into the implications of this abrupt change, examining the potential economic ramifications, the lingering questions about fairness, and what this means for Malaysia's fiscal future.

The Big Shift: Unpacking the RON95 Subsidy Extension

The official announcement confirms a new RON95 price of RM1.99 per litre for a quota of 300 litres per month. Beyond this limit, the price reverts to RM2.60 per litre, which will be floated based on market rates. A notable exception is registered e-hailing drivers, who will enjoy the lower RM1.99 price without a quota. Verification will be through MyKad, a measure the government hopes will deter foreigners from smuggling subsidised petrol across borders. While the intention to curb smuggling is clear, the effectiveness of this measure is debatable, given that foreign cars are already barred from using subsidised fuel, and the number of foreign private vehicle owners in Malaysia is relatively low. The allowance for Malaysian family members or friends to fill up for foreigners also opens a potential loophole. This sweeping change comes after years of discussions and repeated delays in implementing a targeted RON95 subsidy rationalisation plan, a journey that saw the deadline pushed from late 2024 to mid-2025, and finally to September 2025, only to be entirely revised.

The Echoes of Previous Promises: What Happened to Rationalisation?

The narrative surrounding targeted subsidies has been consistent since the current government came to power: they were "necessary," the government "had no choice," and they would save the country by channelling resources more efficiently. Figures were even floated, suggesting 90% of Malaysians, or 18 million car drivers and motorcyclists, would be eligible. The goal was clear: prevent subsidies from benefitting the rich. Just last month, reports even detailed criteria like luxury vehicle and property ownership to determine eligibility. Last Friday, the Home Minister Saifuddin Nasution Ismail advised Malaysians to ensure their MyKad chips were functional, explicitly stating subsidies would still be targeted. This makes the universal extension even more perplexing. The swift reversal raises fundamental questions about the government's long-term economic strategy and its commitment to fiscal discipline. What does this U-turn signal about the resolve to tackle structural economic issues? For those who believed in the necessity of these reforms, the abrupt shift feels like a significant departure from previously stated principles.

Unintended Consequences? The Financial Realities

Ironically, for all the talk of targeted subsidies being essential to reduce the budget deficit, reducing the RON95 price from the current RM2.05 per litre to RM1.99 per litre actually means the government will be paying out *more* in subsidies. This is a crucial point that often gets overlooked in the broader discussion. Consider the economic impact: if the goal was to "optimise national resources" and "reduce subsidy waste," how does increasing the total subsidy payout align with that objective? Moreover, while a 300-litre quota exists, it's a generous amount, far exceeding the typical monthly usage for many. For wealthy individuals, this quota presents little hurdle; they can simply opt for more fuel-efficient cars, a luxury not afforded to lower-income individuals often reliant on older, less efficient transport. This nuance highlights how universal subsidies, even with nominal limits, can disproportionately benefit those with greater financial flexibility, undermining the very idea of equitable resource allocation.

MyKad Verification: Convenience or Congestion?

The introduction of MyKad verification for RON95 purchases raises practical questions for everyday Malaysians. We've seen in-store credit card terminals with card slots, but what about the broader implementation? The government has stated that at-pump terminals and petrol company apps will also be able to verify eligibility. However, many pumps lack credit card terminals, and not everyone uses apps for payment. Crucially, details on how these alternative verification methods will work remain scarce. The concern is palpable: will this new requirement lead to long queues at petrol station counters, especially during peak hours? Imagine the frustration of waiting extra minutes just to fill up, impacting daily commutes and schedules. From a user experience perspective, seamless integration is paramount to avoid widespread inconvenience. A robust, well-tested system is essential to prevent operational bottlenecks and ensure a smooth transition for millions of drivers.

The EV Dilemma: Will Cheap Petrol Halt Green Mobility?

The government has ambitious targets for Electric Vehicles (EVs) to make up 15% of vehicle sales by 2030, supported by various tax incentives. However, with RON95 fuel now hitting a new low of RM1.99, the financial incentive to switch to EVs diminishes significantly. Why invest in a more expensive EV when conventional petrol remains so affordable? This policy could inadvertently derail Malaysia's green mobility agenda. If demand for EVs plummets, the government will face pressure to extend existing tax incentives or introduce new ones to meet its environmental goals. Yet, with an increased RON95 subsidy payout, the fiscal space for such extensive EV incentives might shrink considerably. This creates a challenging paradox: promoting affordable traditional fuel while simultaneously encouraging a shift towards sustainable, but currently more expensive, alternatives. It's a delicate balancing act that requires careful consideration of long-term environmental and economic objectives.

Diesel Disparity: What About Other Subsidies?

The expansion of RON95 subsidies to all Malaysians inevitably raises questions about fairness, particularly for those using diesel vehicles. Diesel users, if they qualify, currently receive a targeted subsidy of RM200 a month, contingent on an annual household income of less than RM100,000 and not driving a luxury car less than ten years old. This mechanism, the "Budi Madani system," appears light years behind the MyKad verification being introduced for RON95. The stark difference in approach creates an undeniable disparity. Will the diesel subsidy system be upgraded to match the seemingly more advanced MyKad verification? Or will diesel users continue to navigate a more stringent, less universal system? This divergence in policy could lead to perceptions of inequality, challenging the notion of a unified approach to national resource allocation. It highlights the complexities of implementing fragmented subsidy policies across different fuel types and consumer groups.

The Bigger Picture: Who Pays the Price?

This significant policy pivot leads to a paramount question: if the government is effectively paying out more in RON95 subsidies, who will ultimately bear this cost? It's increasingly clear that the government may lack the political will to tax the super-rich, especially after the mooted High Value Goods Tax (HVGT) was canned. So, will the greater rakyat pay for this subsidy in other areas? Just this morning, alongside news of the subsidy expansion, The Star reported that PM Anwar Ibrahim had previously stated savings from targeted subsidies would be directed towards critical areas like "education, health, and basic infrastructure," including flood-damaged public infrastructure in Sabah. What will happen to these vital initiatives now that the anticipated savings are no longer materialising, and indeed, subsidy payouts are set to increase? This move suggests a potential reordering of national priorities, where immediate relief for consumers might supersede long-term investments in public services.

Charting the New Course: A Shift in Economic Strategy

The government's decision to extend the full RON95 petrol subsidy to all Malaysians marks a profound shift from its previously stated commitment to targeted subsidies and fiscal rationalisation. While offering immediate relief to consumers, this policy reversal raises critical questions about its long-term economic implications. The immediate takeaway is a departure from the "save the country" narrative that underpinned earlier subsidy reform efforts. We've seen the abandonment of taxing the rich through initiatives like the HVGT, and now a broad-based fuel subsidy that may strain national finances. This impacts crucial sectors like education and health, which were promised funds from subsidy savings. Furthermore, it complicates the national push for Electric Vehicles and highlights a disparity in how different fuel types are subsidised. The implementation challenges of MyKad verification, coupled with the potential for increased queues and continued smuggling, add layers of complexity. The future of diesel subsidies also remains ambiguous, with its targeted approach contrasting sharply with the new universal RON95 policy. As we navigate this new economic landscape, the true cost and benefits of this policy will unfold, shaping Malaysia's economic trajectory for years to come.

Frequently Asked Questions (FAQs)


Q1: Who is eligible for the RM1.99 RON95 petrol price?
A1: All Malaysians are now eligible for the RM1.99 per litre price for RON95 petrol, verified using their MyKad. However, a quota of 300 litres per month applies, after which the price reverts to RM2.60 per litre (market price). Registered e-hailing drivers are an exception, receiving the lower price without a monthly quota.
Q2: How will the MyKad verification work at petrol stations?
A2: Initially, MyKad verification is expected to be available via in-store credit card terminals with card slots. The government has also stated that at-pump terminals and petrol company apps will eventually support verification, though specific details on how these will operate are still pending. It's advisable to ensure your MyKad chip is functional to avoid any issues.
Q3: Will this new policy reduce the national budget deficit?
A3: Counterintuitively, the reduction in RON95 price from the previous RM2.05 per litre to RM1.99 per litre means the government will likely pay out *more* in subsidies compared to the previous system. This move is not expected to reduce the budget deficit; instead, it may increase the government's subsidy burden.
Q4: What are the implications for Electric Vehicle (EV) adoption in Malaysia?
A4: With RON95 petrol becoming even more affordable, the incentive for consumers to switch to higher-priced EVs may decrease. This could potentially slow down EV adoption rates and make it more challenging for the government to meet its target of 15% EV sales by 2030, possibly requiring an extension of current EV tax incentives.
Q5: How does this RON95 policy affect diesel vehicle owners?
A5: Diesel vehicle owners still operate under a targeted subsidy system (Budi Madani), receiving RM200 per month if they meet specific income and vehicle criteria. The universal nature of the RON95 subsidy creates a disparity and raises questions about potential upgrades to the diesel subsidy mechanism to match the MyKad verification system.
Q6: What impact will this have on other government initiatives like education and health?
A6: Previously, the government indicated that savings from targeted subsidies would fund critical areas like education, health, and infrastructure. With the expansion of RON95 subsidies potentially increasing government expenditure, the funding for these promised initiatives might be impacted.
Over to you now – what do you think of the expansion of RON95 subsidies to all Malaysians? Do you agree or disagree with the implementation? Share your thoughts and let us know your perspective in the comments below!

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