Budget 2025: RON95 petrol subsidy cut to start mid-2025 – top 15% earners (T15) to pay more for fuel

The government has announced that it will restructure the RON 95 petrol subsidy in mid-2025, with a switch to a targeted subsidy. This was revealed by prime minister Datuk Seri Anwar Ibrahim during his tabling of Budget 2025.

He said that at present, the country spends RM20 billion a year in petrol subsidies to maintain the pump price of RON 95 at a capped RM2.05 per litre, and streamlining this to a targeted subsidy would save the government RM8 billion.

The PM said this amount, which accounts for 40% of the total petrol subsidy, was what was being “enjoyed by foreigners and the top 15% of super-rich consumers.” He stated that this money would be better utilised for the improvement of educational facilities, health as well public transportation.

Anwar added the government remains committed to maintaining subsidies for the majority of the people, which means that 85% of RON 95 users will not be affected. He said the government would “continue to bear subsidies estimated at RM12 billion for the needs of these 85%.”

No details on how the petrol subsidy rationalisation would be implemented, so it remains to be seen what form the mechanism will take, ahd whether it will be gradual (unlikely). Presently, unsubsidised RON 95 is priced at RM2.76 per litre (October 18).

Because it has a significantly larger user base, the route for RON 95 petrol is unlikely to follow that adopted for diesel, where pump prices are set to full market price, with those eligible for subsidies getting RM200 credited to their bank account monthly. The threshold for diesel subsidy is an annual income of RM100,000, so this could be higher for petrol because of the top 15% mention. Expect more info to trickle in over the following months.

Looking to sell your car? Sell it with Carro.

Learn more: Budget 2025