Budi95’s targeted approach allows for a reduction in the subsidised RON95 petrol price for Malaysians from the previous RM2.05/litre to RM1.99/litre. — IZZRAFIQ ALIAS/The Star
Budi95 logoTHE government’s Budi Madani RON95 (Budi95) programme is redefining the nation’s approach to fuel subsidies.
As part of the Finance Ministry’s “rakyat-first” strategy, the initiative goes beyond merely adjusting prices, as the Ministry aims to make a bold statement on fiscal discipline, fairness and the concept of subsidy as a privilege reserved for Malaysian citizens.
For years, Malaysia operated on a system of blanket subsidies for essential goods, including RON95 petrol. While seemingly beneficial, this approach was plagued by significant “leakages”.
The previous system meant that everyone—Malaysian citizens and non-citizens alike—enjoyed the same subsidised price at the pump.
This indiscriminate approach also benefited large companies and industries as subsidised rates shielded corporations from market realities and insulated them from market fluctuations, which created an unequal playing field that put local enterprises at a disadvantage..
The result was a considerable drain on national resources, with substantial public funds being lost annually to these inefficiencies. This fiscal haemorrhage was not only unsustainable but also fundamentally unfair.
The Budi95 programme is designed to plug these leakages, ensuring that government funds are spent responsibly and with a clear purpose.
By removing the blanket subsidy for foreigners and corporates, who will now pay the market (unsubsidised) price, the government could potentially generate significant savings of up to RM4bil annually.
With retargeted subsidies, the generated savings don’t just balance the books—they bolster Malaysia’s fiscal credibility, signalling to investors the government’s commitment to resolute economic management.
Preventing leakages enables more savings to directly fund significant benefits for 16 million Malaysians, while also freeing up crucial resources for productive investments that will support the country’s long-term competitiveness.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the move would benefit all Malaysians, irrespective of their income level.
“The new subsidised price should help Malaysians in dealing with the rising cost of living issues, and the savings from measures like this should allow the government to provide higher allocation for cash transfer programmes next year, which will benefit the low and middle-income individuals,” he said.
He also shared that the initiative will help to cultivate a market that is more efficient, fair and transparent.
“The use of MyKad, and the 300 litre quota, can act as a deterrent to smuggling activities,” he added.
This new, targeted approach allows for a reduction in the subsidised price for Malaysians from the previous RM2.05/litre to an even lower RM1.99/litre.
The Budi95 initiative also introduces a fundamental re-evaluation of what a subsidy means. Subsidies are now recognised as a special support for Malaysians, ensuring that citizens come first.
Now, all Malaysians, regardless of income level, are entitled to the subsidised price of RM1.99/litre. The only requirement is to verify with a valid MyKad and driving licence.
This shift is vital in fostering a sense of shared ownership and responsibility among the populace, where the collective benefit is preserved and protected from abuse.
Simultaneously, it will also create a more resilient and competitive economic framework, whereby public funds are reallocated to productive investments, correcting market distortions and strengthening fiscal health.
Additionally, the savings generated from this targeted subsidy model could be channelled into other impactful social programmes that truly benefit those who need it most.
The Rahmah Basic Assistance (Sara) initiative, for example, is a testament to this approach, where a RM100 one-off financial aid was distributed to all Malaysian citizens aged 18 and above.
The interconnectedness of these policies demonstrates the Ministry’s long-term vision for a more inclusive and resilient economy.
Sunway University economics professor Dr Yeah Kim Leng said that the continuing fuel subsidies will particularly benefit low and middle-income groups.
“Malaysians of all income groups will enjoy low and stable transport expenditure that amounts to 11.3% of average household expenditure.
“A positive feature of Budi95, besides mitigating the cost of living increases, is that a tested infrastructure and mechanism will already be in place should the country be hit by a major oil price shock,” he said.
In essence, the Budi95 initiative embraces fiscal discipline, plugging long-standing leakages and redefining subsidies as a privilege for its citizens.
To know more, visit www.budimadani.gov.my. For enquiries, call the Budi Madani official hotline at 1-300-88-9595 or e-mail tanya@budi95.gov.my.
