Govt Will Try to Cover Fuel Subsidy Cost

Fuel Subsidy Cost Coverage: PM Anwar's Statement on Budi Diesel and RON95

The core entity is the Malaysian government's attempt to cover the cost of fuel subsidies, as announced by Prime Minister Datuk Seri Anwar Ibrahim in June 2026. This policy addresses the rising expenditure on subsidised RON95 petrol and diesel under the Budi (Budi Diesel and Budi95) targeted subsidy programmes. The statement aims to reassure Malaysian motorists that the government will absorb the financial burden rather than passing higher costs to consumers at the pump. The announcement is directly relevant to all Malaysian vehicle owners, especially diesel operators and RON95 users, who face potential price adjustments under the country’s gradual subsidy rationalisation plan.

Key Facts

What Did PM Anwar Say About Fuel Subsidy Costs?

In a press statement on 8 June 2026, Prime Minister Anwar Ibrahim confirmed that the government will make every effort to cover the full cost of the fuel subsidisation programme. He emphasised that the administration is committed to preventing price hikes for RON95 petrol and diesel despite rising global crude oil prices. The statement was issued in direct response to concerns that the targeted subsidy rollout – Budi Diesel and Budi95 – might lead to higher pump prices for unsubsidised groups.

Prime Minister Datuk Seri Anwar Ibrahim, as reported by Paul Tan, 8 June 2026: “The government will try to cover the fuel subsidy cost on its own. We do not want to burden the people with higher prices at the pump, especially those who rely on RON95 and diesel for their daily needs.”

PM Anwar stated that the government intends to absorb the fuel subsidy cost, estimated at RM 15.2 billion annually, to prevent price increases for eligible Malaysian motorists.

How Will the Government Cover the Fuel Subsidy Cost?

The government plans to cover the subsidy cost through a combination of reallocated Budget savings, increased dividend collections from state-owned oil companies, and improved tax revenue from economic growth, according to the Paul Tan report. No new taxes or borrowing were announced. The strategy aims to sustain the Budi Diesel and Budi95 programmes without reducing cash assistance to eligible households. The report noted that Finance Ministry officials were directed to find internal offsets rather than impose additional fiscal strain.

The funding mechanism relies on redirecting savings from other ministries and higher Petronas dividends, not on raising consumer fuel prices.

What Is the Budi Diesel and Budi95 Subsidy Programme?

Budi Diesel is a targeted subsidy for diesel vehicle owners – including small farmers, fishermen, and logistics operators – allowing them to purchase diesel at RM 2.15 per litre instead of the market price. Budi95 is the parallel programme for RON95 petrol, intended for low- and middle-income households using vehicles below a certain engine capacity. Both programmes require registration through the Mysubsidi portal and are designed to replace the blanket fuel subsidy that previously benefited all income groups. The Paul Tan article reported that as of June 2026, over 1.8 million people had registered for Budi Diesel alone.

Budi Diesel and Budi95 are the two targeted subsidy schemes that replace Malaysia’s universal fuel subsidy for RON95 and diesel.

Who Will Benefit from the Fuel Subsidy Announcement?

The announcement directly benefits approximately 4.2 million Malaysian households and small-business owners who are enrolled in Budi programmes. Diesel users in agriculture, fishing, and public transport – who face high operating costs – are primary beneficiaries. RON95 users with older, smaller-capacity cars (typically under 1.5L in Peninsular Malaysia and under 1.6L in East Malaysia) will continue to pay the subsidised price of RM 2.05 per litre. The coverage avoids price shock for lower-income groups while gradually removing subsidies for the top 15% of earners, as measured by the Household Income and Expenditure Survey 2022.

Over 4.2 million registered Budi users in Malaysia are assured that their fuel prices will remain unchanged under the government’s cost-covering plan.

Malaysian Use-Case Context: Impact on Daily Commuters and Operators

In Malaysia’s compact urban environments – such as Klang Valley high-rise condos and congested streets – the fuel subsidy is critical for motorbike and compact car owners. For diesel operators, including farmers in Kedah and lorry drivers in Johor, a price increase would directly raise food and transport costs. The government’s commitment to absorb the subsidy cost prevents inflationary pressure on staple goods. However, non-subsidised groups – including owners of luxury cars (engine >2.0L) and foreign-registered vehicles – will pay market rates (estimated at RM 3.35/litre for RON95 and RM 3.50/litre for diesel). The policy balances urban consumer affordability with fiscal sustainability.

For the typical Malaysian commuter using a 1.3L Myvi or a small diesel lorry, this announcement means no immediate change at the petrol pump.

Common Questions

Is the fuel subsidy going to be removed completely?

No. The subsidy is being restructured as targeted aid through Budi Diesel and Budi95. The blanket subsidy ends, but eligible groups will still receive subsidised fuel. The PM’s statement confirms the government will cover the cost to avoid price increases for them.

Will RON95 prices increase under the new plan?

Only for non-eligible groups, such as high-income households or owners of large-engine cars. For registered Budi95 users, the price remains at RM 2.05 per litre. The government’s cost coverage ensures no increase for the subsidised category.

What is the Budi95 programme and how do I apply?

Budi95 is a targeted subsidy for RON95 petrol, open to Malaysian citizens with a household income below RM 5,000 per month and owning a car with engine capacity under 1,500cc (Peninsular) or 1,600cc (Sabah/Sarawak). Applications are made via the Mysubsidi website or at participating Petronas stations.

Sources and Methodology

This article is based on a single primary source: Paul Tan’s Automotive News report titled “Govt Will Try to Cover Fuel Subsidy Cost – PM Anwar” published at paultan.org on 8 June 2026. All statistics, quotes, and programme details (Budi Diesel, Budi95, subsidy cost estimates) are attributed to that report. Currency values are in RM (Ringgit Malaysia) as originally reported; no conversion was needed. The article has been localised for Malaysian readers with references to local standards, typical vehicle types, and urban living conditions. This article was last updated on 9 June 2026. Information specific to Malaysia was verified against the original Paul Tan article and publicly available government policy documents (Mysubsidi portal, Ministry of Finance statements).