Budget 2025 saw Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim announce that from mid-2025 – which you might think is only six months away – subsidies for gasoline at 95 RON will be targetmeaning that only those who deserve it will benefit from the subsidized price (currently RM2.05 per liter), and those who do not deserve it will have to pay the market price (currently RM2.76 per literbased on Dual Essencecurrent rate).

Since Anwar declared that this development would not affect 85% of Malaysians, in the following weeks there have been many suggestions and debates from various quarters on who should does not deserve he.

But before we can even begin to define the Salary class T15 (15% of richest employees) – RM12,000? RM13,000? RM15,000? RM30,000 even? Gross or net income? – we even talk about T10 and T5 as a possible threshold for the 95 RON subsidies that all Malaysians have benefited from for around forty years.

It’s the “who?” ” question. The hardest question is “how?” The user base of RON 95 is certainly larger than that of diesel, for which subsidies have been targeted since June. And although diesel is, to a large extent, the main fuel for the commercial sector, there is no clear sectoral separation possible for RON 95 gasoline – it is the people’s fuel.

In this article, we look at the three main “how?” mechanisms that have been publicly suggested, discuss the pros and cons of each, and highlight unanswered questions.

Monthly credit in bank or electronic wallet

Under this mechanism, everyone pays the same unsubsidized price at the pump, but only those eligible will receive a certain predetermined amount. credited monthly to their bank or e-wallet accounts. This system is similar to that used for rationalization of diesel subsidiesalthough for diesel, disbursements are only made to bank accounts and not e-wallets.

Benefits

At first glance, this seems to be the simplest to implement. There would be no need to install terminals at gas stations across the country or gateways for subsidized and non-subsidized prices.

In addition to saving set-up costs, there are also no worries about internet, or lack thereof, in remote areas (which would be necessary for a MyKad-based system, more so below). below) nor potential delays in setting the correct subsidized/unsubsidized prices. at the pumps. If you are a Grab or taxi driver, or have a company fleet, it is also easier for you to manage your costs.

Disadvantages

Assuming that the question of who dad and who take this is answered (this would have to be decided in advance by a different system, as it cannot be determined at the pump via this mechanism), you will still need to submit your bank or e-wallet details to the government, and the big many of RON 95’s users would certainly crash a government-run application website.

A “certain predetermined amount” implies a fixed amount. What happens if I pump more this month and less next month, or what if my friend buys less gas than me but gets the same amount credited as me each month? If it is not a fixed amount, it must then be based on the amount of 95 RON that one pumps during that month. The idea of ​​gas stations across the country reporting to the government how much gasoline each eligible person buys each month seems impractical at best.

Unsubsidized, the price of 95 RON floats depending on market conditions. It is RM2.76 per liter at the time of writing this article, but if it increases or decreases drastically, the monthly aid amount will surely need to be revised. As mentioned, it’s RM200 for diesel, which powers (in the private sector) cars or vans, but with RON95 we have plenty of bikes too. Should bikers get the same amount as drivers, say RM200 per month?

Plus, with the full grant credited to an individual’s account each month, who’s to say they won’t just spend the “extra money” and still end up complaining about the expensive fuel?

And since everyone pays the same unsubsidized price of 95 RON at the pump, there is a risk that companies will use this price increase as an excuse to increase their prices, leading to high inflation.

MyKad-based two-tier pricing at the pump

Under this system, you would need your MyKad to pump gas. You’ll pay the subsidized rate if you’re eligible, and the full market price if you’re not. This would require MyKad terminals to be installed at gas stations across the country and serve as gateways to subsidized and unsubsidized prices.

Benefits

Until we are ready for a tiered system with a few subsidy tiers, it seems like a two-tiered system (either you get a full subsidy or none) is the best way to start. This system ensures that you receive the appropriate subsidy amount for the amount you pump. There is no need to create an online application portal; there are also no issues of market price fluctuation as you either pay the subsidized rate or the market rate, whatever it is, from time to time.

The government would also get clearer data on how much subsidies were used, where and by whom, which could be useful for future reviews of targeted fuel subsidies. Don’t worry between bike and car owners either, as the subsidy is given based on actual usage.

Disadvantages

Unless biometrics (and perhaps facial recognition for added security) are integrated into this system at gas stations nationwide, it is open to abuse and fraud. One could use someone else’s MyKad (relatives/friends/staff) to pump gas, or there could be opportunistic touts at gas stations offering their MyKad for a fee to unlock the subsidized price .

And now that the MyKad has the power to influence how much you pay for gas, it could lead to an increase in theft. MyKad chip failures are not uncommon, which could lead to a rush for replacements. Every gas station in the country (yes, even in the most remote areas) would need internet for the system to work, and there could be potential delays at the pumps due to long lines to check eligibility and pay.

Privacy could also be an issue – sure, using credit cards lets financial institutions know how much you spend, where you spend it, and what you spend it on, but the general opinion about any government is that certain circles will not be satisfied with this. Big Brother is able to learn more about how and how often you move thanks to the pump.

Then there’s the elephant in the room: who’s going to pay for all the MyKad reader terminals required at gas stations across the country?

Price based on vehicle type

This involves removing access to the subsidized price of RON 95 from owners of expensive or luxury vehicles.

Benefits

You have to argue for and against, you understand. If the objective here is to ensure that subsidies do not go to Maha KayaIt is visually the quickest way to determine eligibility.

Disadvantages

How do you divide the dazzling array of makes, models and variants on sale in Malaysia into “prince” and “poor” categories (assuming a two-tier system)?

By brand? Proton, for example, sells a Saga of around RM30,000but he also sells RM153k Flagship X90. It would not be unreasonable to expect the respective owners to have very different incomes. Same as RM85k Honda City S And RM400k Honda Civic Type R – that’s a gap of over RM300,000!

By price? Suppose we set the bar at RM200,000, which was originally proposed to visualize diesel cuts. But not only are there brands with models straddling both sides of that number; there is also variations within the same model that do the same thing.

What about old cars? Can we take inspiration from the rationalization of diesel subsidies and allow a full subsidy “luxury vehicles” aged 10 years and over? So the owner of a Ferrari 250 GTO from the 1960s will pay the same price for 95 RON as the owner of a Perodua Axia. That doesn’t sound good, does it.

Perhaps the more important question is how this will be enforced at gas stations. Obviously, asking staff to identify and categorize every car that arrives is almost impossible, but perhaps PADU or JPJ data could be used to identify owners of expensive vehicles deemed unworthy.

However, this would also require ID, which brings us back to the MyKad-based two-tier system. Furthermore, this system would also require a separate mechanism for exclude foreignerswhich has been highlighted as one of the main drivers of this rationalization of subsidies (since it should benefit the entire rakyatnot the Maha Kaya and foreigners).

Not to mention it will make life even more difficult for the papa biar, asal bergaya people, who will have to shell out even more money to stock up on luxury cars that they can barely afford. Of course, you could also say: well, if you want glamour, be prepared to pay the price.

Final Thoughts

Clearly, the 95 RON targeted subsidy is a much more complex undertaking than the streamlining of diesel subsidies. The decision to save billions of ringgit by ensuring that the subsidy is only paid to those who need it is a rational decision, and we wait with bated breath for further developments to see how this will be implemented.

For now, after looking at the pros and cons of each mechanic above, what do you think? Agree or disagree with any of them? Maybe you have a new solution? Share with us in the comments.

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Learn more: RON95 fuel subsidy