Kuala lumpur: The government’s decision to lower the price of RON95 petrol to RM1.99 per litre through targeted subsidies is expected to bolster Malaysia’s fiscal position while ensuring assistance reaches the rakyat, economists say. Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the measure reflects the government’s commitment to channel subsidies directly to citizens while creating more fiscal space for priority spending.
According to BERNAMA News Agency, Dr Mohd Afzanizam stated, “This step underscores the government’s ongoing commitment to ensure that assistance benefits only Malaysians. It will also strengthen the country’s fiscal position and provide broader policy space to redirect funds to citizens through cash aid, education, healthcare, and infrastructure.” He noted that this initiative is likely to contribute to positive assessments by credit rating agencies, supporting the ringgit and attracting foreign capital inflows.
Mohd Afzanizam also highlighted that with RON95 comprising about five per cent of the Consumer Price Index (CPI) basket, the measure is unlikely to shock the economy while helping the government balance fiscal discipline with cost-of-living concerns. Prime Minister Datuk Seri Anwar Ibrahim, who is also Finance Minister, announced earlier today that RON95 petrol will be reduced from RM2.05 per litre to RM1.99 effective Sept 30 under the BUDI MADANI RON95 (BUDI95) programme.
The programme stipulates that all Malaysian citizens with a valid driving licence are eligible for the subsidy. Based on data from the Road Transport Department and National Registration Department, more than 16 million people are expected to benefit. Meanwhile, economist Prof Geoffrey Williams remarked that subsidy rationalisation will remain a key fiscal priority in Budget 2026, suggesting that it could serve as a legacy budget for Anwar, potentially introducing broader reforms such as a universal basic income, a universal pension, and free higher education.
Furthermore, the finance ministry recently noted that S and P Global Ratings reaffirmed Malaysia’s sovereign credit rating at ‘A-‘ with a stable outlook, citing the country’s well-diversified economy, steady growth, political stability, balanced external position, and narrowing fiscal deficits. On the note, the ringgit opened slightly higher against the US dollar today, supported by the stable sovereign outlook and stronger domestic economic data.
The Ministry of Finance stated that all Malaysians are eligible for RON95 petrol at the subsidised price for up to 300 litres per person each month under the BUDI95 programme. E-hailing drivers are exempt from this ceiling and can apply for additional allocations to support their livelihoods. The monthly ceiling was determined based on Department of Statistics findings, which show that more than 99 per cent of private vehicle drivers in Malaysia do not exceed this amount.
The ministry also announced that the government has simplified the process for citizens to access subsidised RON95, including eliminating the need for registration. A single step of MyKad verification is required to purchase RON95 at the subsidised price, with MyKad readers installed in stores and at fuel pumps to reduce congestion. Digital options are also available, including Touch ‘n Go e-wallets and fuel company apps such as Setel by Petronas and CaltexGo. The BUDI95 programme will be implemented gradually to ensure system stability and prevent sudden spikes in demand.