KUALA LUMPUR, Oct 13 — The Malaysian government’s decision to roll out the Budi95 programme for subsidised RON95 petrol to Malaysians was aimed at plugging leakages, including smuggling, first, and could perhaps be further refined, Treasury secretary-general Datuk Johan Mahmood Merican said today.
Johan explained that Malaysia had previously been caught up in a public debate over the definition of the T15 top-income earning category.
He added that the government decided to set aside this debate and push forward with Budi95 first to stop leakages.
“I think at that point, government had to make a call, we have a mechanism to address RON95 subsidies.
“We choose to proceed with it, maybe putting aside the issue of the T15 debate, let’s just first address leakages – either through smuggling, foreign or corporates – first, as a first step,” he said during a debate in the post-Budget 2026 dialogue organised by the Malaysian Economic Association here.
He acknowledged University of Nottingham Malaysia’s associate professor Tricia Yeoh’s point that “a gift once given becomes a right”, but said the government decided to start doing something first.
“If we didn’t do anything, we will then spend another year or two debating. So, it’s best to at least achieve some traction rather than none, that’s the call that the government took,” he said.
Earlier in his comments, Johan also said: “Perhaps the parameters can be adjusted over time.”
He pointed out that there was a proposal earlier on for the RON95 subsidy to be targeted and exclude the T15 group, similar to how the government’s subsidy rationalisation for electricity had affected the top 15 per cent household users of electricity but helped maintain electricity tariffs for the other 85 per cent of households.
In the same dialogue, Yeoh had raised concern over how the government could sustain the wide-ranging cash transfers to Malaysians if government revenues fall in the future.
“So for example, you have given RM100 to 22 million Malaysians this year and then next year as well, it’s going to be very difficult to actually stop that in the future. In fact, you started a trend in motion that all Malaysians are going to start to expect,” she said, referring to the one-off Sara RM100 cash aid.
She said Budi95 is like a “blunt instrument” now that could have been introduced in a more sophisticated manner.
“I do hope you will see it being refined in the future. Perhaps you want to gather the data first and then see how to roll it out in a more refined manner,” she said, adding that Malaysians are now used to receiving Budi95 and it would be difficult to roll it back in the future.
Let public know early if Budi95 will phase out Malaysia’s top-earners
At the same dialogue, the World Bank’s lead economist for Malaysia Apurva Sanghi said the Malaysian government “deserves a lot of credit” for starting reforms on subsidies, including on water, electricity, diesel and recently, RON95 petrol.
He noted Malaysia had previously spent more on fuel subsidies alone than on the entire Health Ministry’s budget.
He also proposed that the government announce in advance if it has a long-term plan to exclude top-income earners from RON95 petrol subsidies.
“Maybe the government has plans to start tightening the noose and start phasing out the T1, T5, T20, which is fine.
“But if it is part of a broader plan, please tell us, surprises are great in K-dramas, but not when it comes to RON95 subsidy reform policy. So if it is part of a broader plan, why don’t you just make it public, make it known, set market expectations,” he said.
He asked whether the projected RM2.5 billion savings from the Budi95 scheme would actually be realised, questioning how many foreigners in Malaysia would be purchasing petrol at the RM2.60 per litre price and how many Malaysians would exceed the current 300-litre quota for subsidised RON95 petrol at RM1.99.
Apurva also questioned Malaysia’s aim of achieving net zero as part of its green goals, while simultaneously subsidising driving by Malaysians even more.
While this could be complemented by better, cleaner, and more efficient public transport, he noted that this aspect had not been emphasised as much.
In response, Johan said that the savings from the Budi95 scheme is not so much from foreigners, but from corporate use and from the plugging of leakages of smuggled RON95 petrol across the border such as in Thailand.
