RON95 subsidy rationalisation can save RM8 billion, experts say

SHAH ALAM – The implementation of the RON95 fuel subsidy rationalisation in the second half of 2025 is a timely move in line with the government’s efforts to optimise national fiscal spending.

Putra Business School Business Administration Programme Director Associate Professor Dr Ahmed Razman Abdul Latiff said the initiative is expected to save about RM8 billion, thereby strengthening the country's financial position in the long run.

“This significant saving can be redirected to provide more fiscal aid to those who genuinely need it, particularly the lower and middle-income groups.

“Assistance such as the Rahmah Cash Contribution (STR) and the Rahmah Basic Contribution (SARA) is meant to support vulnerable communities in sustaining their livelihoods,” he told Sinar on Tuesday.

Previously, Finance Minister II Datuk Seri Amir Hamzah Azizan announced that the rationalisation of the RON95 subsidy would be carried out in the second half of 2025.

He said the Finance Ministry (MoF) would continue with the subsidy rationalisation process, but for now, the focus is on ensuring the right recipients were accurately identified.

Razman added that in implementing the targeted subsidy, the government could refer to data from the Central Database Hub (Padu) and make use of MyKad or e-wallets.

Meanwhile, Malaysia University of Science and Technology (MUST) economist Professor Emeritus Dr Barjoyai Bardai said the implementation of the RON95 subsidy rationalisation was expected to have the most significant psychological impact, especially on market sentiment.

He noted that some traders might take the opportunity to raise prices under the pretext of market uncertainty and expected cost increases, potentially leading to premature price hikes.

Barjoyai added that the government must quickly inform the public that the subsidy restructuring would only affect 10 per cent of users and was intended to curb misuse by foreigners entering Malaysia.

“The government has promised it will only impact around 10 per cent of households. So the remaining 90 per cent will be exempted,” he said.