May 20 — In the second half of 2025, the government plans to rationalise RON95 petrol subsidies by moving to a targeted two-tier pricing system. Malaysian citizens will have to swipe their MyKad (national ID card) at the pump to verify their eligibility for subsidised RON95 fuel, while those who are not eligible will pay the higher market price. This plan aims to reduce spending on groups that do not require much assistance. As Prime Minister Anwar Ibrahim emphasised, only the wealthiest 10–15 per cent of Malaysians (the T20 income group) are expected to pay market rates under the new system, with “85 per cent of the rakyat” enjoying subsidised petrol.
Yet, many Malaysians recall that fuel price hikes, even targeted ones, are politically sensitive. Especially during uncertain global economic conditions marked by trade tensions and tariff wars, a delay is seen as helpful, with some saying it is the wrong time to roll back subsidies. Consumer groups also worry about knock-on effects on food and transport costs. The government, however, argues that nearly 40 per cent of subsidised petrol is being misused by non-citizens, commercial vehicles and smugglers, making immediate reform necessary. By eliminating this misuse, Malaysia could save up to RM8 billion a year, which could instead be allocated to schools, hospitals or vital infrastructure (Federal Government Expenditure, 2024).
The government has been test-running MyKad-based aid distribution in other domains. Under the Sumbangan Asas Rahmah (SARA) scheme, around 700,000 low-income Malaysians have been using MyKad to buy essential goods at over 3,500 shops, and this is now being expanded to 5.4 million recipients nationwide. If millions can use MyKad for groceries, why not for petrol?
Linking fuel purchases to personal IDs means vast amounts of sensitive information will be collected. — Picture by Sayuti Zainudin
Promise: Targeting benefits and fiscal gains
If implemented well, a MyKad-based targeted subsidy system is crucial for fairness and efficiency. Currently, wealthy urban SUV owners enjoy the same cheap RON95 as those who are struggling, making this broad subsidy inequitable and wasteful. According to Tengku Zafrul Tengku Abdul Aziz (2022), for every RM1 of fuel subsidy, 53 sen benefits the T20 (top 20 per cent income group) while only 15 sen reaches the B40 (bottom 40 per cent). A MyKad system could help redirect the benefits to those needing them, such as lower- and middle-income Malaysians.
Secondly, fuel subsidies comprise a large proportion of the national budget, worsening the deficit and forcing trade-offs in other fiscal spending. Finance Minister II Amir Hamzah Azizan estimated that rationalising RON95 subsidies could save between RM7.2 billion and RM7.5 billion per year (Ministry of Finance Malaysia, 2025). These savings could reduce the deficit or be reinvested into infrastructure, public transport, or social programmes.
Moreover, by leveraging the national ID database (and the government’s new central database hub, PADU), subsidy distribution could tie into a broader social welfare system for a more holistic safety net.
Pitfalls: Data, privacy and inclusion
Linking fuel purchases to personal IDs means vast amounts of sensitive information will be collected. With that in mind, concerns about data security risks, such as identity theft or misuse, are valid. A policy paper by the Penang Institute (2024) highlighted “security deficiencies in the public sector” and the potential misuse of personal data for political gain. The government must ensure robust cybersecurity safeguards, including end-to-end encryption for MyKad transactions and compliance with personal data protection laws. Moreover, no system should collect more data than necessary.
Another challenge lies in the accuracy and administration of eligibility data. How will the system decide who deserves subsidised fuel? If it is based on income or a “high-income earner” list, there is a risk that inaccurate MyKad database information could unfairly exclude people. The government must establish a clear, accessible mechanism for citizens to check and appeal their subsidy status, as many are already calling for. Transparency is crucial to prevent eligible Malaysians from being cut off due to bureaucratic error.
Ultimately, the government must remain open to public feedback, be transparent about the plan’s rollout, and refine the approach as needed. A secure, fair, and user-friendly system could not only achieve immediate budget goals but also win public confidence in innovative policy solutions.
*Yap Wen Min is a policy analyst at HEYA Inc., a non-profit think tank and people’s academy.
** This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail.
