The Malaysia 2025 Budget, to be announced by Finance Minister and Prime Minister Anwar Ibrahim at 4 PM on October 18, 2024, is expected to address the much-debated RON95 petrol subsidy. Although the government had previously indicated no plans to adjust the subsidy, the recent changes in diesel subsidies have sparked widespread speculation about a potential impact on petrol prices
Government’s Financial Strategy and Fuel Price Adjustments
Prime Minister Anwar Ibrahim is committed to improving Malaysia’s financial stability, particularly by reducing government debt, which currently exceeds 60% of GDP. Reducing subsidies, including those for fuel, is seen as a critical step in achieving this goal. As part of these efforts, adjustments to the RON95 petrol price may be considered in the upcoming budget.
Diesel Subsidy Cut as a Precedent
In June 2024, the government reduced the diesel subsidy, leading to a significant 56% rise in fuel prices. This move is projected to save RM 4 billion annually but has placed pressure on both households and businesses. Despite some government assistance to affected sectors, public dissatisfaction has grown, particularly over the cost of fuel.
RON95 Petrol Subsidy and Future Fuel Prices
The RON95 petrol subsidy accounted for a large portion of the RM 810 billion in subsidies allocated in 2023. However, concerns have been raised over its perceived benefit to higher-income groups. In response to rising financial pressures, the government is expected to cut overall fuel subsidies to RM 528 billion in 2025, which could lead to higher petrol prices in the coming year.
This potential shift in subsidy policy has made the issue of fuel prices a major point of interest for the public, with many speculating on the implications for everyday consumers and businesses alike.
