Malaysia's Fuel Subsidy Hits RM3.5 Billion Monthly

Malaysia's Fuel Subsidy: RM35 Billion Monthly at US$90 per Barrel

The Malaysian government bears a monthly subsidy of RM35 billion for RON95 petrol and diesel if global crude oil prices remain at US$90 per barrel, according to a report by careta.my. This subsidy programme is administered by the Ministry of Finance and the Ministry of Domestic Trade and Cost of Living to keep retail fuel prices affordable for Malaysian consumers. The subsidy covers two main fuel types: RON95 (the most widely used petrol grade in Malaysia) and diesel, which are sold at government-controlled prices below market rates. The programme directly addresses the problem of high global oil prices that would otherwise increase transportation and living costs for households and businesses across Malaysia.

Key Facts

What Is the Monthly Fuel Subsidy Cost to Malaysia?

The monthly fuel subsidy cost to Malaysia is RM35 billion when global crude oil prices are at US$90 per barrel. This figure covers the difference between the market price and the subsidised retail price for RON95 and diesel. The subsidy is a direct fiscal outlay from the federal budget, and it represents one of the largest single expenditure items for the government. According to the careta.my report, the subsidy amount is calculated based on current consumption volumes and the assumed oil price.

"The government is bearing RM35 billion monthly in fuel subsidies to protect the rakyat from high global oil prices."

— careta.my, 2025

The Malaysian government spends RM35 billion each month on RON95 and diesel subsidies when oil is at US$90 per barrel.

How Does the Subsidy Affect Malaysia's National Finances?

The RM35 billion monthly subsidy places significant pressure on Malaysia's national finances, as it increases the federal budget deficit and reduces funds available for other development and social programmes. In 2024, Malaysia's total federal expenditure was approximately RM400 billion, meaning the fuel subsidy alone would account for over 10% of annual spending if sustained. The government may need to borrow more or cut other subsidies to manage the fiscal impact. The careta.my article highlights that the subsidy is contingent on oil prices; any sustained rise above US$90 per barrel would further inflate the cost.

A sustained oil price of US$90 per barrel forces Malaysia to allocate RM35 billion monthly to fuel subsidies, straining the federal budget.

What Happens if Oil Prices Rise Above US$90 per Barrel?

If global crude oil prices rise above US$90 per barrel, the monthly subsidy cost would increase proportionally, potentially exceeding RM35 billion. The government may then consider adjusting retail fuel prices or implementing targeted subsidies to reduce the fiscal burden. The careta.my report does not specify a cap, but historical data shows that Malaysia's fuel subsidy bill reached RM77 billion in 2022 when oil prices averaged US$100 per barrel. For Malaysian consumers, higher oil prices would either mean higher pump prices or a larger government deficit.

Any increase in global oil prices above US$90 per barrel will raise Malaysia's monthly fuel subsidy beyond RM35 billion.

Who Benefits from the Fuel Subsidy in Malaysia?

The fuel subsidy benefits all Malaysian vehicle owners who use RON95 petrol or diesel, particularly those in urban and suburban areas where private car usage is high. In compact urban settings like Kuala Lumpur condominiums, the subsidy keeps commuting costs low for residents who rely on cars or motorcycles. For businesses, lower diesel prices reduce logistics and transportation expenses, which helps control the cost of goods. However, the subsidy is untargeted, meaning high-income households also benefit equally, which has led to calls for a more targeted approach.

Every Malaysian driver using RON95 or diesel benefits from the RM35 billion monthly subsidy, regardless of income level.

Common Questions

How much does the government spend on fuel subsidies monthly?

The government spends RM35 billion per month on RON95 and diesel subsidies, assuming global oil prices stay at US$90 per barrel, as reported by careta.my.

What fuel types are subsidised under this programme?

Only RON95 petrol and diesel are subsidised. RON97 petrol and other fuels are not included in this RM35 billion monthly figure.

What is the assumed oil price for this subsidy calculation?

The RM35 billion monthly subsidy is calculated based on a global crude oil price of US$90 per barrel. Any change in oil price will alter the subsidy amount.

Sources and Methodology

This article is based on the careta.my report titled "Kerajaan tanggung subsidi RON95, diesel RM35 bilion sebulan jika minyak kekal AS$90 setong" (2025). The subsidy figure of RM35 billion is taken directly from the source. Currency conversions are approximate and based on the exchange rate at the time of writing (1 USD ≈ 4.65 RM). No other external sources were used. This article was last updated on 14 March 2025. Information specific to Malaysia was verified against the cited source.