As the Budi Madani RON95 programme takes effect nationwide today, with over 16 million Malaysians eligible for subsidised petrol, a consumer advocate has warned of the long-term consequences of subsidies.
Muhammad Sha’ani Abdullah, former secretary-general of the Federation of Malaysian Consumer Associations (Fomca), said financial education – not subsidies – is the key to sustainable change.
“People who argue about subsidies, criticise the government, and complain about the high cost of living often do so at coffee shops, sipping expensive drinks and eating costly meals,” he said.
“They eat out frequently and spend beyond their means, yet never think about managing their finances.”
Budi95 caps petrol prices at RM1.99 for the first 300 litres and is available to all Malaysian citizens with a valid driving licence.
The government has long subsidised petrol to cushion the impact of rising global prices, but the cost has become unsustainable. Muhammad Sha’ani stressed that Malaysians must shed their subsidy mentality, which he said is draining the nation’s finances.
Last week, Finance Minister II Datuk Seri Amir Hamzah Azizan said the Budi95 programme would save the government between RM2.5 billion and RM4 billion, depending on global oil price fluctuations. He added that Malaysians could save about RM200 a month by using Budi95.
At petrol stations, consumers can pay by showing their MyKad, slotting it into payment machines, or using petrol apps that have already stored their details. Any consumption beyond 300 litres will be charged at the pump price, which currently fluctuates between RM2.05 and RM2.65 per litre. E-hailing drivers can apply for a higher allocation.
“While the government has a role to play, the real solution lies in financial education. Malaysians must shift their mindset and learn to live within their means,” said Muhammad Sha’ani.
“We need more non-governmental organisations to lead financial literacy campaigns. These initiatives must reach the right audience – those who need the knowledge most.”
He noted that the government loses billions of ringgit annually to subsidies for petrol, sugar, electricity, cooking oil, and flour. These funds, he argued, could be better channelled into long-term improvements.
“If losses can be reduced, the government can reinvest in education, healthcare, transport, and housing to better serve the rakyat,” he said.
“Now that we have Budi95, the government should analyse consumption patterns to identify who benefits most from subsidies and adjust policies accordingly.”
Muhammad Sha’ani added that the ultimate goal should be to move away from price controls and subsidies, which distort market forces.
“When subsidised materials are used in exported goods, businesses profit without compensating the rakyat, who bear the cost through low wages and subsidies,” he said.
While acknowledging that Budi95 provides short-term relief, he emphasised that long-term stability requires financial education and sound fiscal policies.
“In the future, tax revenue should be used more efficiently, with greater focus on targeted social welfare and education programmes rather than blanket subsidies,” he said.
