Malaysia is advancing plans to restructure its fuel subsidy framework, focusing on refining eligibility criteria for subsidised RON95 petrol. The move aims to target subsidies more effectively while minimizing disruption to households still reliant on government support.

Economy Minister Akmal Nasrullah Mohd Nasir acknowledged the complexity involved in drawing a precise cutoff for subsidy recipients. Speaking at an event on Monday, he emphasized the challenge of ensuring that policy changes do not create significant hardships for vulnerable groups not yet prepared to transition away from assistance. The ministry is working to develop a system that accounts not only for income levels but also incorporates fuel consumption patterns and other behavioral indicators to better reflect actual subsidy usage.

A key element in this approach is the use of the Central Database Hub (Padu), which will integrate multiple data sources to more accurately identify eligible beneficiaries. Akmal explained that this data-driven system would establish a clear dividing line, facilitating a smoother transition and allowing for an appeals process for individuals who feel they have been unfairly excluded. He noted the importance of aligning the rollout with the start of a calendar month to ensure full technical readiness.

“These efforts must be robust enough to ensure subsidies reach only the intended groups,” the minister said.

The subsidy rationalization plan is currently in the final stages of refinement and undergoing review by the Crisis Management Task Force, headed by Tan Sri Mohd Hassan Marican under the National Economic Action Council. Prime Minister Datuk Seri Anwar Ibrahim said on Sunday that the task force was considering various eligibility criteria, including income bands classified as T5, T10, T15, or T20, with a focus on protecting the upper-middle class from adverse effects.

“In principle, we agree with the proposed adjustments, but we aim to ensure the upper-middle class is not unfairly impacted,” Anwar stated, adding that final decisions were expected soon.

Akmal reiterated the need to balance protecting vulnerable households, managing inflation, and ensuring fiscal sustainability. He stressed that the government’s position was consistent: subsidies must be targeted while recognizing the contributions of different segments of society.

Economists have projected that removing the top 20 percent income group (T20) from the RON95 subsidy program, known as Budi95, could save the government as much as RM1.5 billion monthly, highlighting the significant fiscal pressures prompting the reform.