23rd September 2025 - 2 min read
OCBC Bank has cautioned that Malaysia’s new Budi95 petrol subsidy scheme may not reduce government spending. With around 16 million Malaysians eligible, the bank estimates the subsidy bill could even increase.
OCBC senior ASEAN economist Lavanya Venkateswaran said the government’s fuel subsidy costs might rise by about 0.1% of GDP in 2026 under the current structure. In simple terms, subsidies may still weigh heavily on public finances if global oil prices remain high.
From 30 September 2025, RON95 petrol will be priced at RM1.99 per litre, down from RM2.05. Each Malaysian is entitled to a monthly quota of 300 litres at this subsidised rate.
E-hailing drivers can apply for larger quotas. Non-citizens and large corporations will pay RM2.60 per litre, while RON97 stays capped at RM3.21 per litre.
For the average driver, this translates to modest savings. If you typically pump 250 litres a month, you will save about RM15 compared to the old price.
The goal of Budi95 is not only to reduce petrol prices but also to make subsidies more targeted. In the past, fuel subsidies were applied to everyone equally, regardless of income or vehicle type. Now, the benefits are channelled mainly to Malaysians, while foreigners and large companies will pay more.
For consumers, this means some savings at the pump, but economists do not expect it to significantly reduce everyday living costs. OCBC projects that the reduction in RON95 prices will lower Malaysia’s consumer price index by only 0.1 percentage point.
Fuel subsidies are one of Malaysia’s largest expenses, and the total bill rises and falls with global oil prices. Analysts expect crude oil to remain relatively high in 2025 and 2026, which means Malaysia’s subsidy costs will still be difficult to control.
OCBC noted that while households will benefit from slightly cheaper fuel, the broader impact on the cost of living will be very limited.
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Samuel writes about personal finance and financial news, focusing on how banking updates, policies, and promotions affect everyday money decisions. He enjoys making complicated financial topics easier to follow. Outside of writing, he spends his time watching TV shows and occasionally convincing himself he will only watch one episode.
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