KUALA LUMPUR, 22 September 2025 — Prime Minister Dato’ Seri Anwar Ibrahim has asserted that Malaysia stands alone globally in actively lowering fuel prices in the midst of economic uncertainty. His comments come as the government moves ahead with a planned RON95 fuel subsidy adjustment that will reduce the price from RM2.05 to RM1.99 per litre, effective 30 September 2025, for eligible Malaysians.
Anwar made this claim during a briefing at the Prime Minister’s Department, emphasising that while many countries are increasing fuel costs due to supply chain issues, inflation, or currency pressure, Malaysia’s approach is instead focused on easing cost of living pressures while maintaining fiscal discipline.
Under the revised fuel subsidy scheme, only Malaysian citizens with a valid driver’s licence will be eligible for the subsidised RON95 price of RM1.99 per litre. Foreigners will be charged the market price, which is significantly higher at RM2.60 per litre. Additionally, there will be a cap on monthly subsidised fuel purchases of 300 litres per person, with exemptions for ride-hailing drivers. Any savings from the subsidy changes are earmarked for infrastructure investment and enhanced aid for low-income households.
Background and Broader Context
Anwar has made subsidy rationalisation a central feature of his economic policy agenda since taking office, aiming to shift away from blanket subsidies which have historically placed heavy burdens on the federal budget. Earlier this year, Malaysia already began rationalising diesel subsidies and introducing targeted support for those most affected by energy price shifts.
The announcement of the RON95 fuel price cut comes amid a global landscape where rising crude prices, currency depreciation, and inflationary pressures have pushed many governments to increase fuel prices, not lower them. For Malaysia, this reversal is part of a dual strategy: adopting targeted subsidies to reduce fiscal leakage while providing relief to households.
Investor Angle
- Cost relief for consumers and sectors: Lower fuel prices typically reduce input costs for transportation, manufacturing, logistics, and retail sectors. Investors in these industries may see improved margins, especially for companies with heavy fuel consumption.
- Fiscal implications: Moving from a blanket subsidy to targeted subsidy imposes administrative burdens but also offers potential long-term savings. How effectively the government manages these costs—and the extent to which the subsidy savings are realised—will be closely watched by bond investors and credit rating agencies. If savings are successfully channelled into infrastructure and assistance programmes, this can reinforce growth.
- Market expectations: Markets will be monitoring whether this move changes Malaysia’s inflation trajectory, consumer spending patterns, or foreign investment sentiment. A credible subsidy reform can improve Malaysia’s fiscal metrics, potentially boosting investor confidence.
- Risks and trade-offs: Although not over-emphasised, there are risks. If subsidy caps or enforcement (such as verifying citizenship and licenses) are weak, leakage may persist. Also, pressure on prices of other goods (transport, food) may emerge if fuel costs elsewhere or for non-subsidised users rise.
What This Means in Practice
From 30 September 2025, a Malaysian citizen with a valid driver’s license purchasing RON95 will pay RM1.99 per litre, up to 300 litres a month, except ride-hailing drivers, who are exempted from the cap. Non-citizens will pay the non-subsidised rate of RM2.60 per litre.
