Malaysia’s RON95 petrol remains at RM1.99 per litre, one of ASEAN’s lowest prices, as government subsidies ease living costs and stabilise inflation.

PETALING JAYA: Malaysians are enjoying one of the region’s lowest petrol prices, with RON95 steady at RM1.99 per litre.

The government’s subsidy cushions households from global oil shocks, keeping daily expenses – from commuting to grocery bills – more manageable.

Economists told theSun the policy is a key measure to ease the cost of living, ensuring stability in daily expenses while sustaining economic activity.

“Fuel subsidies are certainly significant to consumers. However, they come at a high cost to the government, which may have long-term implications for the rakyat,” said Universiti Malaya Social Wellbeing Research Centre research fellow Dr Zulkiply Omar.

“The higher fuel prices in neighbouring countries reflect the increasing cost pressures faced by governments in maintaining subsidies.”

Zulkiply added that differences in pricing structures can also have wider consequences.

“Price differences between countries in the region can encourage smuggling, while differences within the domestic system can lead to leakages.”

Putra Business School economist Assoc Prof Ida Md Yasin said Malaysia’s approach keeps inflation in check.

“We are among the cheapest in Asean. So, the government subsidy is clearly significant because it keeps fuel affordable. When fuel prices remain stable, inflation is not as high because transportation and logistics costs within the country remain stable.

“For now, inflation is still not very high, although we do not know how long this can be sustained.”

Universiti Teknologi Malaysia economist Prof Dr Nanthakumar Loganathan said sustaining the subsidy comes at a steep cost.

“The government will continue to maintain the subsidy price for a certain period, as it needs to spend around RM2 billion to RM3 billion per month on fuel subsidies. We are still maintaining lower prices to ensure Malaysians receive government support. The government is putting more effort for lower and middle-income groups as the cost of living has increased.”

He added that targeted measures such as Budi95 aim to ensure support reaches those who need it most.

“Budi95 is good enough for the government and the rakyat. It protects the majority of users, although the government still needs to manage the cost as global prices increase.

“The rakyat should understand that the government is bearing the subsidy. The more fuel we use, the more the government has to spend.”

From a transport perspective, UiTM’s Malaysia Institute of Transport senior lecturer Dr Abdul Khabir Rahmat said subsidised fuel underpins daily mobility and economic activity.

“When petrol prices are kept low, it directly reduces daily commuting costs such as going to work, sending children to school and other daily activities. At the same time, petrol has indirect effects.

“When fuel costs are controlled, transportation and logistics costs become more stable. This helps prevent sudden increases in the price of goods, especially food and basic necessities, and helps control inflation.”

He added that the policy also supports sectors dependent on daily movement.

“In Malaysia, more controlled pricing gives stability not only to households but also to sectors such as logistics, e-hailing and small businesses that depend on daily mobility.”

Abdul Khabir also pointed out that Malaysia continues to import refined fuel despite producing crude oil.

“Producing crude oil does not necessarily mean we process everything domestically. In Malaysia’s case, some of our crude oil is more suitable for export. At the same time, it is more cost-efficient to import refined petrol from regional refining centres such as Singapore.

“This is more of an economic decision and part of the global supply chain structure, not simply an issue of capacity or lack of resources.”

Ida said Malaysia’s policy contrasts with other Asean nations that have cut subsidies.

“In other countries, petrol prices are higher because subsidies have been reduced, exposing consumers to global price fluctuations. Malaysia’s policy reflects a deliberate choice to prioritise stability despite rising global costs.

“The government is bearing a high subsidy cost because global oil prices have increased. It has been announced that prices have gone up and cannot be denied.”

 The Sun Malaysia