Economist: Excluding T20 From BUDI95 Saves RM1.5B a Month

By Danial Martinus • 06 May 2026 in News

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Fuel subsidies are part and parcel of Malaysian life. It’s something we tend to take for granted, especially as the rest of the world suffers from the fallout of tensions in West Asia.

With the current BUDI95 subsidy scheme helping tide the effects of the closure of the Strait of Hormuz, there’s another question being asked: Should people in the T20 bracket be allowed to enjoy the same subsidies that would otherwise benefit lower income groups more?

According to Ahmed Razman Abdul Latiff, an economist at Putra Business School, they should be excluded entirely. This, he argues, would lead to RM1.5 billion in savings every month.

Limiting fuel subsidy scheme to those who actually need it

In order to qualify for the BUDI95 scheme, you need to hold a valid Malaysian driver’s license. This is open to all who have one, regardless of tax bracket.

What this means in the long run is that people in higher income groups (T20) in fact make much more savings than those who rely on it to get by, like the B40 and M40. In other words, T20 already earn more, which means they’ll have more disposable income saved thanks to the scheme.

At the same time, excluding those who don’t need the BUDI95 scheme could result in greater savings for the government.

“The government can consider restructuring existing subsidies so that only those in need would receive them. For example, BUDI95 now applies to all Malaysians with a valid driving licence. Perhaps this can be limited to the B40 and M40,” Razman told Free Malaysia Today.

“It was previously said that over 30% of RON95 is used by the T20. If RM5 billion is spent on RON95 subsidies a month, that 30% would equal to the government saving RM1.5 billion a month if the T20 don’t get the subsidies.”

While the rising cost of living affects everybody (regardless of income group) in one way or another, he argues that those who are most affected by it should be the ones benefiting from fuel subsidies, instead of incorporating a blanket scheme for all.

Bank Muamalat chief economist Afzanizam Abdul Rashid echoed the sentiment, saying the RON95 subsidy structure should be limited to vulnerable income groups.

“The savings from the subsidies for the high-income would be quite significant since these users typically use high-powered vehicles. The lower-income benefit more from the subsidies,” he said.

But his stance does differ slightly from that of Razman’s. Afzanizam argues that the T20 shouldn’t be removed entirely from the BUDI95 scheme. Instead, they should be given lower monthly quotas compared to lower income groups.

What do you think the BUDI95 arrangement should be?