RON95 subsidy rationalisation in final stages

The Star

21-07-2025

KUALA LUMPUR: The government is focusing on finalising the details of the RON95 subsidy rationalisation, which will begin in the second half of this year, said Finance Minister II Datuk Seri Amir Hamzah Azizan.
He noted that just as it was with the diesel rationalisation, the goal for the RON95 subsidy rationalisation is to ensure that the government plug leakages and that businesses and the wealthy contribute their fair share.
"This is so that we have the fiscal strength to secure subsidies for the people who genuinely need them.
"The same careful approach applies to the expansion of Sales and Service Tax (SST) -- it diversifies revenue and is part of prudent expenditure management," he said in his keynote address at the Invest ASEAN-Malaysia Conference 2025 today.
Amir Hamzah noted that the government's commitment to fiscal consolidation remained strong as the country had achieved a budget deficit-to-gross domestic product (GDP) ratio of 4.1 per cent last year, better than the official target of 4.3 per cent.
He said that the government is now targeting a 3.8 per cent fiscal deficit for 2025 and is staying consistent with the Public Finance and Responsibility Act 2023 to reduce the deficit to three per cent in the medium term.
"This will be accomplished through revenue-enhancing measures, tax system efficiency and taxpayer compliance.
"This year we are doing the SST expansion and the RON95 subsidy rationalisation, and hopefully that will add a revenue base along the way," he said, adding that the government is confident of getting the additional RM10 billion revenue from the SST expansion, despite recent additional exemptions.
In the meantime, Amir Hamzah emphasised that Budget 2026 and the soon-to-be-tabled 13th Malaysia Plan (13MP) will focus on being pragmatic, sensible and driving continuity in the nation's progress.
"While it is too early to share details, I can say that it will be yet another effort in securing our economic future, responding where necessary to current economic headwinds and building a fairer, more equitable society," he said.
He added that several other reforms are in the pipeline to support economic growth, build credibility and set governance examples.
"These include the judicial and institutional reform, fiscal and public sector reform, social protection and inclusivity reforms, and digital and innovation-led transformations.
"Current global volatility makes reforms more, not less, urgent. Institutional strengthening, fiscal discipline, and innovation capacity-building are complements to sustainable, resilient economic expansion that is capable of weathering future global disruptions," he added. - Bernama