To understand where we are today, we need to look back. Over the past 16 years, Malaysian fuel prices have gone through several major reform phases, from blanket subsidy to managed float, back to subsidy, and finally to targeted subsidy today.
2010-2014: Era of Full Subsidies
In the early decade, RON 95 was heavily subsidised at RM 1.90/litre. The subsidy was open to everyone, including foreign nationals and commercial vehicles. It cost the government an estimated RM 20 billion a year.
2014: Global Oil Price Collapse
When global oil prices collapsed from USD 110 to USD 40 per barrel in late 2014, the Malaysian government took the opportunity to abolish the blanket subsidy and introduce a managed float system. This was the first major reform step.
2015-2019: Managed Float
Throughout this period, RON 95 and RON 97 prices fluctuated with global markets, with monthly (then weekly) adjustments. This was the first time Malaysians felt real price volatility.
2020-2021: COVID-19 Price Ceiling
When the pandemic hit and the economy was affected, the government introduced a RM 2.05/litre ceiling for RON 95 as a support measure. This returned to a form of blanket subsidy.
2022-2024: Global Inflation Pressures
The Russia-Ukraine war caused global oil prices to surge. Malaysia's fuel subsidy ballooned to over RM 50 billion a year at its peak. The government began planning more targeted subsidy reform.
2025: BUDI 95 Launch
In September 2025, the government launched BUDI 95, a targeted subsidy where Malaysian citizens with an active driving licence enjoy the RM 1.99/litre rate. Foreigners and company vehicles must pay the market price — eligibility is based on citizenship and a licence, not income.
2026: A New Era
Today, we're in a new era: eligible drivers enjoy the fixed RM 1.99/litre subsidised price (capped at 200 litres a month since April 2026), while foreigners and any purchases beyond the quota are exposed to global price swings. It's a policy experiment that remains under observation.
What We've Learned
Fifteen years of fuel pricing policy in Malaysia offers several lessons that policymakers and citizens alike should keep in mind:
First, blanket subsidies are expensive and regressive. When the government sets the same price for everyone, the wealthy who drive luxury cars with large tanks receive far more dollar benefit than poor families driving a Myvi. This is one of the key reasons BUDI 95 was introduced, to ensure the subsidy actually reaches those who need it.
Second, floating prices expose citizens to global volatility. While floating prices are more economically efficient, they create an unstable cost of living for ordinary households. Drivers planning daily trips struggle to budget accurately when prices swing RM 0.10-0.20 per litre week-to-week.
Third, fuel policy is closely tied to inflation. Diesel in particular, which powers trucks and fishing boats, can affect food prices, vegetables, and daily goods. That's why Sabah and Sarawak have a separate diesel subsidy distinct from Peninsular Malaysia.
Looking Ahead
As Malaysia moves toward renewable energy and electric vehicle (EV) targets, the role of fuel in the national economy will shift. The National EV Action Plan envisions EVs reaching 15% of new car sales by 2030. If that target is met, demand for RON 95 may plateau, which will change the subsidy equation again.
At the same time, geopolitical uncertainty (Russia-Ukraine war, Iran tensions, OPEC+ policy shifts) means global oil prices will remain volatile. For Malaysians, understanding the APM system and BUDI 95 becomes increasingly important, not just for managing the family budget, but for understanding economic news and policy decisions.
The lesson from history: Malaysian fuel prices have always been a blend of global economics and domestic political considerations. No system is perfect, only different tradeoffs.