7th October 2026 - 4 min read
The government spent 40.1% less on subsidies in 2025, according to the Auditor-General’s Report on the Federal Government’s 2025 Financial Statements, released on 5 October 2026. Subsidy spending fell to RM23.43 billion, from RM39.10 billion in 2024. The whole drop came from fuel. The government paid RM15.79 billion less to keep petrol, diesel, and cooking gas cheap, while other subsidies went up slightly.
At the same time, welfare aid for individuals and families grew almost five times, to RM20.36 billion from RM4.24 billion in 2024. Most of that went out as cash aid through Sumbangan Tunai Rahmah (STR), Sumbangan Asas Rahmah (SARA), and BUDI MADANI.
The government sets the price you pay for RON95 petrol, diesel, and LPG (cooking gas). When the real market price is higher, the government pays the difference so your price stays low. That payment is the subsidy.
In 2025, fuel subsidies cost RM19.11 billion, 45.2% less than in 2024. Petrol and diesel subsidies each fell by almost half.
| Fuel Subsidy | 2024 | 2025 |
| Petrol | RM19.66 billion | RM10.51 billion |
| Diesel | RM11.54 billion | RM5.98 billion |
| LPG (cooking gas) | RM3.71 billion | RM2.63 billion |
| Total | RM34.91 billion | RM19.11 billion |
Source: Auditor-General’s Report 2/2026, Table 17
Cheaper crude oil explains part of the drop. Oil averaged $69.05 a barrel in 2025, compared with $80.82 in 2024. When oil costs less, the government has less to top up on every litre.
The report also points to targeting, which means only people who qualify get the subsidised price. Since June 2024, diesel in Peninsular Malaysia has been sold at the market price, and eligible diesel users get cash help instead. Petrol followed with BUDI95, which lets Malaysians with a valid driving licence buy RON95 at RM1.99 a litre, up to a monthly limit. BUDI95 only started on 30 September 2025, so the 2025 accounts include just three months of it.
While fuel subsidies shrank, the government paid RM15.51 billion in cash aid through three programmes. STR made up just over half of it.
| Programme | What You Get | 2025 Spending |
| STR | Cash for lower-income households, paid in phases | RM8.00 billion |
| SARA | Credit on your MyKad for basic goods, RM50 to RM200 a month for STR recipients, plus a one-off RM100 for all adults | RM7.11 billion |
| BUDI MADANI | Diesel help for eligible individuals, farmers, smallholders, and transport fleets | RM0.40 billion |
| Total | RM15.51 billion |
Source: Auditor-General’s Report 2/2026, Table 18
STR and monthly SARA go to lower-income households. If you’re not an STR recipient, the cash aid you’d most likely have received in 2025 was the one-off RM100 SARA credit for every Malaysian adult.
In its reply to the auditors, the Ministry of Finance said it’s targeting diesel and RON95 subsidies so the money saved can go to programmes that help vulnerable groups, including STR and SARA.
In 2025, fuel subsidies fell by RM15.79 billion, while STR, SARA, and BUDI MADANI paid out RM15.51 billion. The two amounts are close, but this isn’t the same money simply moved from fuel to cash aid. Part of the fuel savings came from cheaper oil rather than targeting, and the government’s other spending and income also changed during the year.
A fuel subsidy helps everyone who fills up, and people who drive more get more of it. Cash aid goes mainly to lower-income households, including people who may not drive at all. If you’re on STR, this money is aimed at you. If you aren’t, your main support is still the RM1.99 RON95 price. That petrol subsidy cost RM10.51 billion in 2025, the biggest single subsidy in the report.
Next year’s report will be the first to cover a full year of BUDI95. That’s when you’ll see what targeting does to the petrol subsidy over a whole year.
Budget 2027 will be announced this Friday, 9 October. That’s where the government will say how much goes to fuel subsidies, STR, and SARA in 2027.
For 2026, the government set aside RM15 billion for STR and SARA, paid for with savings from fuel subsidy targeting. STR recipients have been getting monthly SARA credit on their MyKad this year, and every Malaysian adult also received another RM100 in SARA credit from February.
Stay tuned for our Budget 2027 coverage. We’ll bring you the highlights so you can understand what’s changing, plus a game plan to help you make the most of subsidies, tax reliefs, rebates, and more.
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As a creative content writer, Eloise has covered finance, business, lifestyle topics, and even moonlights as a singer-songwriter outside of RinggitPlus. Her current interests are learning the best ways to optimise spending and credit card hacks to gain more airline miles.
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