SHAH ALAM, Oct 8 – Malaysia’s fuel subsidy bill is projected to reach RM40 billion this year, amid a surge in global crude oil prices, the Finance Ministry said.
The ministry said fiscal reforms, including targeted petrol and diesel subsidies, were being implemented to maintain fiscal sustainability while ensuring public resources were used more efficiently and effectively, without neglecting the needs of the people.
"The West Asia conflict has pushed global crude oil prices above US$120 per barrel, and Malaysia has also been affected by the crisis.
“Petrol, diesel and LPG subsidies, which stood at around RM800 million a month in January and February, surged to almost RM5 billion a month in March and April,” the ministry said in a written parliamentary reply dated October 7.
The ministry added that the monthly subsidy bill subsequently moderated to around RM3 billion between June and August this year.
"Based on the government’s latest projections, the subsidy burden for petroleum products in 2026 is estimated at RM40 billion," it said.
The ministry was responding to a question from Mohd Syahir Che Sulaiman (PN-Bachok) on the latest projection for fuel subsidy expenditure this year, its fiscal implications and government spending priorities amid uncertainty over global oil prices.
It added that the government would continue monitoring global oil prices and implementing targeted fuel subsidies without compromising the country’s fiscal position.
On the BUDI MADANI RON95 (BUDI95) initiative, the ministry said it was introduced on September 27, 2025, allowing Malaysians to purchase RON95 petrol at the subsidised price of RM1.99 per litre using their MyKad.
"Foreigners and businesses, meanwhile, purchase RON95 at the market price," it said, adding that the targeted mechanism had successfully reduced leakages in petrol subsidies.
The BUDI Diesel programme was also implemented using MyKad from July 1, allowing eligible users to purchase diesel at RM2.10 per litre.
The ministry said the government would continue implementing targeted subsidy reforms to ensure sustainable public spending while safeguarding the needs of the people.
