Budi95 – an immediate and tangible comfort for now

IN Malaysia, the price of petrol carries more weight than just the cost of filling a tank.

It touches on almost everything, from the price of food to the cost of transport.

When the fuel price goes up, everyone feels its pinch. When it is affordable, a little more breathing room becomes available in the household budget.

That is why the new Budi Madani RON95 subsidy scheme, or Budi95, is a much welcomed move.

Under this new system, every Malaysian with a valid MyKad and driver’s licence is entitled to buy RON95 petrol at RM1.99 per litre.

It is capped at a maximum of 300 litres per person per month, an average of what most Malaysian drivers use.

Budi95 benefits some 16 million Malaysians.

The context matters. Oil prices remain volatile. Russia’s war in Ukraine has led to supply cuts from major oil producers while the still uneven global recovery has combined to push up crude prices.

For a country like Malaysia, which imports refined fuels, fluctuating oil prices would lead to a rise in the pump price if there is no subsidy.

The market price of RON95 without these subsidies could hover around RM2.60 per litre, a price that stings for ordinary families and a burden that would ripple across the economy.

The government had two choi­ces: to allow the market price to prevail or shield citizens from its full impact.

It chose the latter but, this time, with more discipline.

In the past, fuel subsidies were given to all.

A foreign tourist could enjoy the same benefits as an ordinary Malaysian.

Companies with vast fleets also paid less.

However, blanket subsidies are expensive and wasteful.

Budi95 is designed to be smarter. By linking the subsidy to identity cards and driving licences, it closes the loopholes for foreigners, smugglers and corporations to enjoy the subsidies meant for the people.

By capping usage at 300 litres per month, it is sufficient for most drivers, but not for those who have two or three cars.

Under this new scheme, the government expects to spend RM11bil this year on subsidies, reducing by almost half of what it paid under the old system.

Of course, the system is not perfect.

There will be complaints from those who argue the quota is too low, particularly in rural areas where distances are long and cars are older.

There will also be grumbling from businesses that can no longer refuel at subsidised rates. Yet, these imperfections are, in truth, the point.

Subsidies are not meant to be endless or unlimited.

They are meant to cushion households, not bankroll smuggling or corporate profits.

For ordinary Malaysians, the impact is straightforward.

The B40 (lower income) households will save the most in relative terms.

The M40 middle class, often stretched thin by stagnant wages and rising bills, will also feel some relief.

Even the wealthier T20 households still enjoy cheaper fuel for now – though the government has hinted that the richest may be excluded in the future.

There are, of course, longer-term questions. Can Malaysia afford RM11bil a year in subsidies? How will future governments balance the need to protect citizens with the need to invest in health, education and infrastructure?

And at what point should the wealthiest Malaysians be asked to bear the full price of fuel?

These are debates worth having. But that can wait for now.

Budi95 has given Malaysians something tangible and immediate: the comfort of being able to fill up the petrol tank knowing that it will not cost more.