Understanding Malaysia’s BUDI95: What the New RON95 Subsidy Means for You

 

Introduction

Malaysia’s long-standing fuel subsidy system for RON95 is going through one of its biggest changes in years. With rising global oil prices and government concerns about leakages and fiscal strain, the shift to a more targeted subsidy is here known as BUDI95. Starting 30 September 2025, this new policy changes who qualifies, how much you get, and what you’ll pay. What does this mean for everyday Malaysians? Let’s break down the details, the impact, and what you can expect.

1. What is BUDI95 & How Will It Work

• BUDI95 replaces blanket subsidies for RON95 with a targeted scheme. All Malaysians aged 16+ with valid driving licence + MyKad will qualify for the subsidised RON95 rate of RM1.99/litre. 

• Non-citizens will pay the non-subsidised rate (~RM2.60). 

• Monthly quota: 300 litres per person. If you use more, you’ll pay full price for the excess. Special provisions for e-hailing drivers. 

2. Why This Is Being Done

• Govt spending on fuel subsidies has become large and unsustainable. In 2023, total fuel subsidies reached ~RM38 billion, with RON95 being a large chunk. 

• Much of the benefit had been skewed, higher income households, big vehicle users, foreigners ended up using up large volumes of fuel and enjoying subsidies. The govt wants fairness and to reduce misuse. 

• Savings from this change (~RM2.5–RM4 billion/year) will be redirected into aid & welfare schemes like SARA, STR, etc. 

3. Who Gains, Who Might Feel the Burn

Gains:

• Ordinary private vehicle owners who use less than 300 litres/month still get benefit, they pay only slightly more (or same) but with limit.

• Low income / frequent commuters benefit because the scheme tries to protect them.

• Better fiscal health for the govt could translate into more targeted subsidies elsewhere or improvements in infrastructure.

Potential downsides:

• Those who consume more (long-distance commuters, big-engine cars) may see extra cost.

• Inflation ripple: higher fuel cost => higher transport cost => higher goods/services price.

• Risk of misuse or evasion unless system enforcement is tight (MyKad usage, pump QR/ID readers, fraud checks).

4. How Much Will It Actually Cost You

Here’s a simple comparison:

Monthly Fuel Use (litres)	What You Pay Now (blanket subsidy & RM2.05/litre)	Under BUDI95 Subsidy (RM1.99 up to 300 litres)	Difference (Savings / Extra Cost)
200 L	RM410	RM398	- RM12
300 L	RM615	RM597	- RM18
400 L	RM820	RM597 + 100×2.60 (excess litres) = RM863	+ RM43 extra cost

• If you use 200 litres/month, the difference is small, you save a little.

• If you use more than 300 litres, the extra consumption is at full price, so you pay more.

5. Broader Impacts & Things to Watch

• Inflation: Because fuel affects many sectors (transport, food delivery, goods transport, etc.), there could be price increases in other goods.

• Auto sector: Could affect car buying trends (people may prefer fuel-efficient cars or EVs). 

• Public transport demand, or shift to hybrids/EVs.

• Government systems: Implementation matters — MyKad readers at pump stations, verification, preventing abuse.

6. What You Can Do to Prepare

• Track your monthly fuel consumption. If you're over 300L, you may need to adjust usage.

• Consider carpooling, more efficient routes, or switching to more fuel-efficient vehicles.

• Budget for possible rises in transport, delivery, goods prices.

• Stay informed about eligibility and requirements (MyKad, driving licence).

Conclusion

BUDI95 represents a major shift in how fuel subsidies work in Malaysia , toward a more targeted, sustainable, and fairer system. For many Malaysians, it’s a small rise in complexity, but with potential benefits like savings and better government spending.

The bottom line: If you use fuel moderately (under the quota), you may still come out ahead. If you consume a lot, you'll need to plan. Either way, this change is an opportunity to rethink how you spend, how you travel, and how you budget.