Govt Agrees In Principle To Remove RON95 Subsidies For Wealthier Malaysians. Here’s What Happens Next
The government says it has agreed in principle to rationalise RON95 fuel subsidies for higher-income groups, but is still deciding whether the policy should apply to the T20, T15, T10 or top 5% of earners.
Cover image via Anwar Ibrahim
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UPDATE:
Here's How The RON95 Subsidy Cut Could Work
The government has agreed in principle to remove RON95 fuel subsidies for higher-income Malaysians, Prime Minister Datuk Seri Anwar Ibrahim has confirmed
However, it is still deciding whether the policy should apply to the T20, T15, T10, or the top 5% of earners.
Speaking to reporters after a dialogue session with Indian students at Universiti Malaya, Anwar said the proposal is currently being refined by a task force under the National Economic Action Council (NEAC), chaired by Tan Sri Mohd Hassan Marican.
"The proposal was tabled about a month ago by the task force chaired by Hassan. It has since been reviewed, and discussions were held on whether it should apply to the T5, T10, T15 or T20 income groups," he said.
"In principle, we agree, but we want to ensure it does not affect the upper-middle class. They are working on it, and I hope it will be finalised soon."
The latest remarks signal that Putrajaya is moving closer to implementing long-discussed targeted fuel subsidies, particularly involving RON95
Currently, RON95 petrol is subsidised at RM1.99 per litre for Malaysians with a valid driving licence, with a monthly cap of 200 litres, down from the earlier 300 litres, following disruptions linked to the conflict in the Middle East that have affected oil and energy supply.
Meanwhile, nonsubsidised RON95 has crossed the RM4 mark and is currently priced at RM4.02 per litre, up 5 sen from last week.
Economists have previously estimated that excluding the T20 group from RON95 subsidies could save the government up to RM1.5 billion a month
The issue gained renewed attention after UMNO Youth chief Datuk Dr Muhamad Akmal Saleh called for a broader review of targeted subsidies, including the removal of RON95 fuel subsidies for wealthier Malaysians.
Akmal argued that fuel subsidies should instead be redirected towards the B40 and M40 groups, who are more heavily affected by rising living costs and economic uncertainty.
"In the current economic situation, we need to re-rationalise subsidies and implement them in a highly targeted manner for those who genuinely need them," he said during the Rimbun 2.0 programme on economic sovereignty.
The proposal was among 25 resolutions discussed during the programme, which focused on strengthening Malaysia's economic resilience amid global uncertainty.
Akmal also said the resolutions would be refined before being brought to the UMNO Political Bureau and Supreme Council, before any cabinet-level policy discussions.
The RON95 subsidy issue comes as Malaysia continues facing concerns over subsidy leakages and cross-border smuggling
Separately, authorities recently foiled an attempt to smuggle 1,000 litres of RON95 into Thailand after detaining two Thai nationals at the Immigration, Customs, Quarantine and Security (ICQS) Complex in Kedah.
The Kedah Domestic Trade and Cost of Living Ministry (KPDN) said enforcement officers discovered about 500 litres of petrol hidden in each of two modified Toyota Hilux pickup trucks registered in Thailand.
Authorities estimated the total seizure value at RM104,200.
The case is being investigated under the Supply Control Act 1961, which carries penalties including fines of up to RM1 million and imprisonment of up to three years for first-time offenders.
Two pickup trucks were seized by the General Operations Force (GOF) after they were suspected of attempting to smuggle 1,000 litres of RON95 petrol into a neighbouring country at the Bukit Kayu Hitam ICQS complex.
Image via New Straits Times