The rationalisation of RON95 petrol subsidies is apparently set to take effect from June this year.
The era of cheap fuel for all Malaysians is coming to an end, as the MADANI government has confirmed that blanket RON95 petrol subsidies will be rationalised in the second half of this year. And while full details regarding the how targeted subsidies will work remain unclear, what has nevertheless been made certain is that MyKad will be the key tool in determining who will still be eligible for cheaper fuel at the pump in the future.
As hinted at for some time now, RON95 will soon transition to a two-tier pricing system based on income category, and the latest indications suggest that MyKad will be used to identify whether a person falls within the T15 bracket—or outside of it.
The T15 group (referring to the top 15% of Malaysian earners) will no longer enjoy subsidised fuel. While the exact income threshold is still under review, estimates suggest that households earning around RM 12,000 to RM 13,000 per month will fall into this category.
Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim has previously stated that this move is necessary to transition towards a targeted subsidy model. According to government estimates, 85% of Malaysians will still qualify for subsidised fuel. The shift towards a more targeted petrol subsidy is expected to help Malaysia save around RM 8 billion per year, as the country currently spends RM 20 billion annually to keep RON95 prices capped at RM 2.05 per litre.
Right now, the non-subsidised price of RON95 petrol hovers at RM 2.98 per litre.
How exactly MyKad will be integrated into this subsidy rationalisation system at the pump remains to be seen, with officials having assured that the mechanism is currently being fine-tuned before its expected rollout in June. Here’s hoping that the rakyat will get clear information about how it will work well before the system kicks in.
This cautious approach is likely due to lessons learned from the diesel subsidy rationalisation. Diesel prices were floated last year, and while targeted fleet card subsidies were introduced for commercial users, the rushed transition led to widespread confusion. Many businesses and private users were left scrambling for clarity. The government likely wants to avoid a similar scenario with RON95, which affects an even larger segment of the population.
A similar MyKad-based system is already in place through the Sumbangan Asas Rahmah (SARA) programme, which allows eligible recipients to spend RM 100 or RM 50 per month at participating retail stores and supermarkets. Currently, 700,000 Malaysians benefit from SARA, and this number is set to increase to 5.4 million people soon. With the same MyKad system already being used across 3,500 retail stores, a similar system should be easily extended to petrol stations.
