appConfigEntityId

bodyType

customContents

entityId

entityUuid

isVideo

articlePageQuery

article

articleSchemaContent

content

hooksArticlePageAdvertisementConfigArticle

hooksArticlePageFloatingButtonConfigArticle

appConfig

filter

json

liveArticle

Iman Muttaqin Yusof

Malaysia’s plan to stop wealthier drivers from enjoying cheap subsidised petrol has left Prime Minister Anwar Ibrahim facing a politically fraught question: how to define “rich” without punishing households already squeezed by higher living costs.
The issue has sharpened as the Middle East energy shock strains government finances, forcing authorities to weigh fiscal discipline against the risk of angering middle-class voters in a car-dependent country.
Anwar said the government had agreed in principle to review fuel subsidies for higher-income Malaysians, though it had yet to decide whether the cut-off should apply to the top 20 per cent, 15 per cent, 10 per cent or 5 per cent of earners.
“We have yet to decide whether [it will be applied to] the T20, T15, T10 or T5 income groups, as we do not want it to [affect] the upper middle class,” Anwar told reporters after an event on Sunday.
The proposal, prepared by a Crisis Management Task Force headed by former state-oil company Petronas chief Hassan Marican under the National Economic Action Council, comes as Malaysia’s fuel bill has surged under pressure from higher crude prices and supply jitters around the Strait of Hormuz, one of the world’s most important oil chokepoints.

Malaysia introduced the BUDI95 targeted fuel subsidy in September last year, allowing eligible citizens to buy up to 300 litres of RON95 petrol a month at 1.99 ringgit (50 US cents) per litre, among the lowest pump prices in Asia.
That quota was cut to 200 litres from April 1 as a temporary step to manage demand and stretch domestic supplies during the Middle East crisis. The government says average BUDI95 consumption is about 100 litres a month.
The finance ministry said in March that petrol and diesel subsidies under BUDI95 and BUDI Diesel could reach about 4 billion ringgit (US$1 billion) a month if crude hovered around US$100 a barrel. That compares with about 700 million ringgit in January.
By the end of April, Deputy Prime Minister Fadillah Yusof reportedly said monthly fuel subsidy spending had surged further to between 6 billion and 7 billion ringgit.
The fiscal squeeze lands at an awkward time for Anwar, who has built his economic pitch around cleaning up leakages, narrowing the deficit and shifting Malaysia away from blanket subsidies long criticised for benefiting richer households with larger cars and higher fuel use.
Budget 2026 already assumes a narrowing of the fiscal deficit to 3.5 per cent of gross domestic product, while subsidies and social help are projected to fall to 49 billion ringgit this year.

Pump politics
Malaysia’s income bands, commonly described as B40, M40 and T20, refer to the bottom 40 per cent, middle 40 per cent and top 20 per cent of households by income.
Critics say those categories are too crude for subsidy decisions in a country where a household with two working adults in Kuala Lumpur, children in school, elderly parents and housing debt may look comfortable on paper but have little left at the end of each month.
“Politically, any increase in pump prices would be unpopular,” said Adib Zalkapli, managing director of risk consultancy Viewfinder Global Affairs. “Regardless of how it is done, it is a risky move given that the government has limited time until the next general election.”
Hafidzi Razali, founder of advisory firm Strategic Counsel, said the shift was “a long time coming” because well-off Malaysians should not benefit from a blanket subsidy system. But he warned that income alone was a weak metric for defining who should lose support.
“What is ‘well off’ is subjective, hence the mechanism needs to be more multidimensional rather than just looking at income,” Hafidzi said, citing factors such as location, household size, number of income earners and extra responsibilities, including caring for disabled children or elderly parents.
“What we want to avoid is again categorising people in blanket buckets of T20 and M40, but rather in a more refined manner that factors in different realities of living.”


Fuel subsidies are not an abstract budget line in Malaysia. Local reports say they are felt at petrol stations, in food delivery costs, in school runs and in the daily commute of a car-dependent country where public transport coverage remains uneven outside major urban corridors.
Geoffrey Williams, director of Williams Business Consultancy, said the government was “scrambling for a solution” to a subsidy bill that had surged under the latest energy shock.
“It is attractive for politicians to target the rich by taking away the subsidy because it seems socially equitable and people are envious of the rich and like to see them pay,” Williams said.
“The problem is that you cannot target the rich efficiently or effectively. If you use T20 as a guide, this is household income, not individual income. So collectively the income is high but for each person, the housewife or children, their income is low.”
A fairer system, he said, would mirror tiered electricity tariffs, with heavier users receiving less subsidy.
Under such a model, drivers could receive the full subsidy for the first 100 litres a month, 50 per cent on the next 50 litres and 25 per cent on the following 50 litres, with no subsidy above 200 litres.


Health crisis grips Indonesians enduring haze: ‘my eyes sting, my head hurts’

Malaysia to invite Myanmar’s Min Aung Hlaing for Rohingya repatriation talks

Kimi creator Moonshot draws global funds seeking ‘top-tier’ Chinese AI developers: sources

Malaysian councillor resigns after DAP remarks at Umno assembly

Malaysia

Malaysia’s fuel subsidy headache leaves Anwar ‘scrambling for solution’

A man fills his towing lorry with diesel at a petrol station in Shah Alam, Malaysia, on May 4. Photo: EPA

Malaysian Prime Minister Anwar Ibrahim says the government has agreed in principle to review fuel subsidies for higher-income Malaysians. Photo: dpa

A vehicle is fuelled at a petrol station in Negri Sembilan in March. Malaysia’s fuel bill has surged under pressure from higher crude prices and supply jitters around the Strait of Hormuz. Photo: EPA

Malaysia’s EV import curbs to protect local car sector criticised for inconsistency

Malaysia’s Prime Minister Anwar Ibrahim touches the first locally made electric vehicle, Proton’s e.MAS 7, at its launch in Kuala Lumpur on December 16, 2024. Photo: AFP

A BYD Seagull electric vehicle displayed at the Auto China event in Beijing last month. The Chinese carmaker is due to start operations of its assembly plant in Perak, Malaysia, later this year. Photo: Reuters

Malaysia pumps up police action at border petrol stations to curb subsidised fuel leaks

A man fills his car with RON95 petrol at a station in Malaysia on March 25. Photo: EPA

Cars park at pumps at a petrol station in Malaysia. Photo: Ivy Ong 

Malaysia’s Maritime Enforcement Agency foils an attempt to illegally transfer about 700,000 litres of diesel off Penang waters on Sunday. Photo: Facebook / Agensi Penguatkuasaan Maritim Malaysia

Iran crisis bites into Malaysia’s supply chain as Anwar cuts fuel subsidy quota

A vehicle is fuelled at a petrol station in Negri Sembilan on Wednesday. Surging diesel prices have put Malaysia in “a second-order stress phase”, analysts say. Photo: EPA

Prime Minister Anwar Ibrahim says the fallout from the Iran conflict is no longer something Malaysia can watch from a distance. Photo: dpa

Cargo ships in the Gulf, near the Strait of Hormuz, amid the US-Israeli conflict with Iran, on March 11. Photo: Reuters

Malaysia battles fuel subsidy misuse after viral 71-litre petrol grab

A worker pumps petrol at a station in Kuching, Malaysia’s Sarawak state, last year. Photo: AFP

Malaysia has intensified its crackdown on fuel subsidy abuse after a video showed a woman illicitly buying 71 litres of RON95 petrol. Photo: Facebook

This Week in Asia

Economics

News

Asia

Southeast Asia

The government will review fuel subsidies for higher-income Malaysians but has yet to decide how the cut-off should be applied, Anwar says


The government will review fuel subsidies for higher-income Malaysians but has yet to decide how the cut-off should be applied, Anwar says.


Malaysia’s fuel subsidy headache leaves Anwar ‘scrambling for solution’

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}The government will review fuel subsidies for higher-income Malaysians but has yet to decide how the cut-off should be applied, Anwar says

The government will review fuel subsidies for higher-income Malaysians but has yet to decide how the cut-off should be applied, Anwar says