While the switch from a blanket petrol subsidy approach to a targeted one under the Budi Madani RON 95 (Budi95) scheme has reduced leakages and trimmed Malaysia’s expenditure on fuel, a former cabinet minister argues that more could have been accomplished in the way of reform.
Nik Nazmi Nik Ahmad, the MP for Setiawangsa, said that while petrol subsidies continue to ease the burden on Malaysians, the current structure has also allowed higher-income groups to benefit disproportionately, despite having the means to pay market rates, as Sinar Daily reports.
“I think, to be fair, the government is trying its best under the current circumstances. But one of the things is that we missed the opportunity to do more in terms of fuel reform,” the former natural resources and environmental sustainability (NRES) minister said.
He pointed out that the move to make Budi95 available to all eligible Malaysians meant that high-income earners were still enjoying subsidised fuel. “Although the subsidy has been reduced to 200 litres, the rich are still receiving it and to me, that is unfair,” he said.
He stressed that subsidies should remain for those who need it, but not for those who can afford to pay full price. “For ordinary Malaysians, it’s fine, but the richest should pay the market rate. If it’s RM5 or RM6 per litre, then they should pay that,” he stated.
Of course, defining a ceiling for cut-off and “richest” would take us back on a journey to before the targeted petrol subsidy was rolled out, when maha kaya was used to describe the T15. In 2024, the department of statistics’ (DOSM) classification for that segment was a household income of RM13,000, a threshold that was felt to be too low.
Nik Nazmi said removing subsidies for the wealthiest groups could encourage more responsible fuel consumption and accelerate the shift towards cleaner alternatives. “If you remove subsidies from the very rich, it would push them towards using EVs. Right now, people are still making unnecessary journeys because fuel is relatively cheap,” he said.
He also highlighted how fuel pricing can influence behaviour, citing that happening in other places. Using Manila as an example, he said the roads are less congested because fuel prices are higher. He said people either switch to EVs or use public transport.
Beyond immediate reforms, Nik Nazmi said Malaysia must accelerate its long-term energy transition to reduce its exposure to global price volatility. “Prices fluctuate depending on global events, especially in West Asia, which is quite unstable at the moment. We need to gradually decouple from that,” he said. He said that diversifying energy sources, including renewables and alternative energy options, would be key to strengthening the country’s energy security.
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AI-generated Summary ✨
Comments express varied opinions on fuel subsidies, with many arguing that subsidies should be eliminated or equally applied across all citizens, emphasizing fairness and collective benefit. Some highlight that high-income earners pay more taxes and should access subsidies accordingly, while others criticize the current system as unfairly benefiting the wealthy or middle class. Several commenters advocate for removing subsidies altogether or implementing transparency measures like a reintroduced GST. Overall, there's a consensus favoring fairness and accountability in subsidy distribution.