Gov’t chose Budi95 quota adjustment rather than price hike to protect majority of Malaysians – Amir Hamzah

The government says the move to temporarily adjust the monthly RON 95 quota to 200 litres under the Budi Madani RON 95 (Budi95) scheme from 300 litres instead of raising the price of the subsidised fuel is aimed at protecting the welfare of the majority of Malaysians, in light of ongoing supply disruptions and surge in global oil prices.

According to finance minister II Datuk Seri Amir Hamzah Azizan, the rakyat would be affected if the government opted to raise the price of subsidised RON 95 rather than reduce the allocated quota. He said that even a minor increase in the price of subsidised RON 95, for example from RM1.99 to RM2.05 per litre, would have a direct impact on all consumers, without exception.

He added the decision to lower the Budi95 quota was based on data analysis and a comprehensive assessment of the implications. He said the majority of users in Malaysia consume around 100 litres of RON 95 per month, making the adjustment targeted and not burdensome for most of the population.

“Adjusting the usage quota only affects a small portion of users, as data shows that about 90% of the population is not impacted by the reduction from 300 litres to 200 litres per month. Although some parties are affected by the policy adjustment, this step is considered the best for now in navigating global economic uncertainty,” he said in an exclusive interview with Berita Harian, as cited by the New Straits Times.

Amir Hamzah said that all measures being taken are part of a medium- and long-term strategy to ensure the resilience of the national economy, while addressing current challenges. “The priority is to ensure sufficient supply, followed by efforts to stabilise prices and reduce leakages, while continuing to assist those who truly need it,” he said.

He said recent global geopolitical developments, brought about by the conflict in Middle East, has had a significant impact on the global energy market. With the Strait of Hormuz handling about 20% of global oil supply, any disruption could lead to supply shortages and a spike in international oil prices, he explained. “Global data shows petrol prices have risen by about 80%, while diesel has increased by as much as 160%. This puts pressure on all countries, including Malaysia,” he said.

For diesel, he said the government is adopting a different approach through targeted cash assistance. At present, assistance for individuals and the agricultural sector has been increased from RM200 to RM300 following the rise in global diesel prices.

The move is aimed at offsetting the impact of higher prices, while controlling price gaps that could encourage smuggling and leakages. “If the price gap becomes too large, the risk of smuggling increases, and this ultimately harms the country as the subsidies are funded by public funds,” he explained.

Amir Hamzah added that the country is studying the possibility of expanding the use of the MyKad format in the targeted subsidy system to diesel, although that may be some time away as there are many considerations to take into account.

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