Are You Eligible For The RON95 Subsidy? Here’s What You Need To Know!
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Great news for you. The targeted RON95 subsidy rationalisation won’t affect 90% of Malaysians, only foreigners and wealthy individuals living in Malaysia.
If that’s the case, why is there a need for restructuring of the RON95 petrol subsidy that shifted from a blanket approach to now a more targeted approach that is supposed to place in 2025? Simply, moving towards a targeted subsidy approach would incur savings of RM8 billion yearly that would be channeled into education facilities, healthcare and public transport – a very positive redirection for the future of Malaysia.
Nonetheless, with the rising cost of living and increased fuel prices, many Malaysians are worried and are looking to maximise every ringgit spent. Hence, as fuel subsidy reform becomes one of the key government policies, it’s more important than ever to understand how these subsidies work and whether you still qualify for it.
For starters, what is RON95 and why was it even subsidised?
RON97 is developed to withstand higher pressure for high performance engines, often seen in sports cars or premium sedans, and therefore produce no knocking. However, if you’re driving a car with an engine without a high performance engine, RON95 is more than enough for daily usage.
As such, the subsidy for RON95 petrol was introduced to make fuel more accessible to the general population. More importantly, the subsidy bolsters the RON95 prices from global oil price fluctuations, ensuring that Malaysians will not be negatively affected by such changes.
Because it is able to strike a balance between affordability and efficiency for most vehicles, RON95 petrol is the most widely used fuel in Malaysia. I mean, I can’t remember the last time I pumped RON97 petrol into my car because I don’t feel the need to do so!
So what’s changing?
Previously, the fuel subsidy took on a blanket approach whereby everyone, whether you’re a Malaysian with a high income or low income, or perhaps you’re not even a Malaysian but drives a Malaysian car, receives the subsidy. This is becoming a very inefficient and costly policy to the national budget.
The fuel subsidy reformation would mean subsidies will be moving towards targeted fuel subsidies that ensures only Malaysians who truly need this financial assistance receive it. Now, the subsidy will depend on factors such as income level, vehicle ownership, and maybe even the location you’re in.
While the exact implementation timeline is still yet to be determined, it is crucial for Malaysians to prepare for the change earlier than later.
Transitioning to a two-tier pricing system
While it was initially discussed for the subsidy to be provided through the rolling out of cash assistance, a well-structured two-tiered pricing model that’s supported by MyKad or e-wallet verification, would streamline subsidy distribution while miminising disruptions to petrol station operations.
This system ensures that only eligible individuals have access to the subsidised RON95 fuel, reduces administrative costs, minimise cases of frauds and facilitates more efficient real-time verification, eliminating the chances of cash subsidies misuse.
So, who is eligible for the subsidy and how will it be determined?
While the exact details on the eligibility criteria for the subsidy is yet to be finalised, here’s what we can expect the RON95 rate to be based on:
| Income level | Priority for the subsidy would most likely be given to individuals in the B40 and perhaps M40 income group |
|---|---|
| Vehicle ownership | Luxury vehicle owners may potentially be excluded from subsidies. Motorcyclist and those with more economical cars are more likely to remain eligible |
| Usage patterns | The analysis of petrol purchases, road tax or even the Padu database may be used to determine actual usage patterns and analysed for subsidy misuse |
What is there to be done now?
Are you part of the B40, M40 or T20?
Check whether your household income falls under the B40 (bottom 40%), M40 (mid 40%) or T20 (top 20%) category as this would impact your eligibility for the subsidy.
Keep track of any official announcements!
With plenty of unverified sources or social media speculations spreading like wildfire in Malaysia, always keep track of any official announcement through the relevant government agencies. In this case, stay informed through the Ministry of Finance and Ministry of Domestic Trade and Cost of Living (KPDN).
