Owners of vehicles with engine capacity of 1,500cc and below or motorcycles of 125cc and below will enjoy a subsidy of at least 30 sen per litre for RON95 petrol.
The subsidy will start in the second quarter of next year. It is estimated that around four million vehicle owners and 2.6 million motorcycle owners will benefit from it.
The minimum 30 sen subsidy per litre depends on the global market oil price and is expected to cost the government RM2bil.
This subsidy has a monthly cap of 100 litres per owner of a vehicle with a 1,500cc engine and 40 litres for motorcycle owners.
It is a slight improvement from Pakatan Harapan’s general election manifesto which promised a petrol subsidy for cars with engine capacities of 1,300cc or less.
Owners of non-subsidised vehicles will have to pay the pump prices determined weekly based on the Automatic Price Mechanism.
Finance Minister Lim Guan Eng said the new scheme would check the leakages arising from fuel price arbitrage and cross-border smuggling.
Federation of Malaysian Consumers Associations secretary-general Datuk Paul Selvaraj welcomed the announcement, saying that it would lessen the burden of those in the lower income group.
“Subsidy should be targeted at those most in need, in this case, the B40 and middle income group.
“The B40 and the middle income group should be assisted in order to lower their cost of living,” he said.
Selvaraj, however, said the mechanism that would be put in place for the targeted subsidy should be “convenient and effective”.