Malaysia Rolls Out Targeted RON95 Subsidy with MyKad Integration

Malaysia is set to implement a groundbreaking targeted subsidy for RON95 petrol in June 2025, with the national identity card, MyKad, likely playing a central role in identifying eligible recipients. Finance Minister II Datuk Seri Amir Hamzah Azizan revealed hints of the mechanism during a recent event in Kuala Lumpur, signaling a shift toward a two-tier pricing system designed to support the majority of Malaysians while streamlining government expenditure.

A Two-Tier System for Fuel Subsidies

The Malaysian government is finalizing a dual pricing structure for RON95, a widely used petrol grade, which will feature a subsidized rate for eligible citizens and a non-subsidized rate for others. According to Amir Hamzah, approximately 85% of the population—referred to as the “rakyat”—will benefit from the lower, subsidized price. This targeted approach aims to ensure that financial assistance reaches those who need it most, a move seen as part of broader fiscal reforms to optimize public spending.

Speaking to reporters at the launch of the new open payment system for Rapid KL On-Demand on March 28, 2025, the Finance Minister II emphasized the importance of a robust system. “The mechanism is being fine-tuned, and we do not want to make any announcement while work is still being done” he stated. He added that the government is prioritizing reliability to prevent implementation hiccups, though specific details on eligibility criteria remain under wraps.

MyKad as the Key to Subsidy Access

One of the most significant revelations from Amir Hamzah’s statements is the potential use of MyKad, Malaysia’s national identity card, as a tool for accessing the RON95 subsidy. The card, already utilized by recipients of the Sumbangan Asas Rahmah (Sara) aid program to purchase essential goods, could be adapted for fuel subsidies. “If 5.4 million recipients can use their MyKad at more than 3,500 shops and supermarkets, what is the difference if MyKad is used for RON95?” he questioned, highlighting the scalability of the existing infrastructure.

The Sara program, which supports low-income households by allowing them to buy basic items such as food, hygiene products, medicines, and school supplies at registered stores, has seen a dramatic expansion. The Finance Ministry announced that starting April 1, 2025, the number of Sara beneficiaries using MyKad will rise from 700,000 to 5.4 million. This increase aligns with a record allocation of 13 billion Malaysian Ringgit (US$2.8 billion) for cash aid programs like Sumbangan Tunai Rahmah and Sara in 2025, marking the highest in the nation’s history.

The integration of MyKad into subsidy distribution is viewed as a logical step, leveraging a system already familiar to millions. However, questions linger about how the card will be used at fuel stations—whether through direct scanning, linked quotas, or other verification methods—and whether data privacy concerns will arise from such widespread usage.

Collaborative Efforts to Define Target Groups

The targeted subsidy initiative is a collaborative effort involving multiple government bodies. Last month, Domestic Trade and Cost of Living Minister Datuk Armizan Mohd Ali informed the Dewan Rakyat in a written reply that the government is in the final phase of drafting a fair and effective targeting system. Discussions with the Finance and Transport Ministries are underway to identify eligible groups, ensuring that the subsidy achieves its intended objectives of equity and efficiency.

While the specifics of these target groups have not been disclosed, the emphasis on fairness suggests a focus on income levels, geographic disparities, or other socioeconomic factors. The involvement of the Transport Ministry also hints at considerations for rural communities or those reliant on personal vehicles for daily commuting, where fuel costs constitute a significant portion of household budgets.

Economic Implications of Targeted Subsidies

Malaysia’s move toward targeted subsidies for RON95 reflects a broader trend in Southeast Asia, where governments are grappling with the dual challenge of supporting citizens amid rising living costs while maintaining fiscal discipline. Fuel subsidies have long been a cornerstone of Malaysia’s social welfare system, but blanket subsidies often benefit higher-income groups disproportionately, straining public finances. By adopting a two-tier system, the government aims to redirect resources to lower- and middle-income households, potentially saving billions of Ringgit annually.

Economists have cautiously welcomed the initiative, though some warn of implementation challenges. Ensuring accurate identification of eligible recipients is critical to avoid exclusion errors, where deserving individuals are inadvertently left out. Additionally, the non-subsidized price for the remaining 15% of the population could spark discontent if perceived as unfairly high, especially in an economy still recovering from global inflationary pressures.

The use of MyKad, while innovative, also raises logistical questions. Fuel stations across Malaysia, particularly in rural areas, may require significant upgrades to handle card-based transactions or verification systems. The government will need to balance technological integration with accessibility to prevent disparities between urban and rural regions.

Public Sentiment and Future Outlook

Public reaction to the targeted subsidy plan remains mixed, based on sentiment gathered from social media platforms like X. While many Malaysians appreciate the intent to focus aid on those in need, others express skepticism about the government’s ability to execute the program without glitches. Concerns about long queues at fuel stations, potential misuse of MyKad data, and unclear eligibility criteria are recurrent themes in online discussions.

The expansion of the Sara program, however, has been broadly praised as a lifeline for vulnerable households. With 5.4 million beneficiaries set to access aid via MyKad at over 3,500 registered stores—an increase from just 700 stores in 2024—the government has demonstrated its capacity to scale social welfare initiatives. If the RON95 subsidy rollout mirrors this success, it could bolster public confidence in targeted aid mechanisms.

Regional Context and Broader Impacts

Malaysia’s subsidy reform comes at a time when neighboring countries like Indonesia and Thailand are also reevaluating fuel subsidy frameworks. Indonesia, for instance, has faced protests over fuel price hikes in recent years, while Thailand has experimented with targeted energy subsidies for low-income groups. Malaysia’s adoption of a technology-driven solution like MyKad could set a precedent for the region, offering a model for balancing fiscal responsibility with social equity.

Moreover, the initiative aligns with Malaysia’s broader digital transformation agenda, which seeks to integrate technology into public services. MyKad, already a cornerstone of identity verification, could evolve into a multi-purpose tool for accessing government benefits, from cash aid to fuel subsidies. However, this also underscores the need for robust cybersecurity measures to protect personal data, especially given the scale of the program.

Looking Ahead

As Malaysia prepares to roll out the targeted RON95 subsidy in June 2025, the coming months will be crucial for finalizing the mechanism and addressing public concerns. The government’s ability to ensure transparency, fairness, and accessibility will determine the success of this ambitious reform. For now, millions of Malaysians await further details on how MyKad will unlock subsidized fuel—and whether this marks the beginning of a new era in targeted social welfare.