{"id":26718,"date":"2023-10-31T15:02:55","date_gmt":"2023-10-31T07:02:55","guid":{"rendered":"https:\/\/www.carsome.my\/news\/?p=26718"},"modified":"2024-07-15T11:04:55","modified_gmt":"2024-07-15T03:04:55","slug":"malaysia-petrol-subsidy-explained","status":"publish","type":"post","link":"https:\/\/www.carsome.my\/news\/item\/malaysia-petrol-subsidy-explained","title":{"rendered":"Would You Pay RM5 for a Liter of RON95? Malaysia\u2019s Petrol Subsidy Explained"},"content":{"rendered":"

Currently, oil prices <\/span>are <\/span>close to its five-year high<\/span><\/a> as a result of numerous factors including geopolitical tensions<\/span>. This has translated into rising fuel prices at the pump around the world.<\/span><\/p>\n

In case you\u2019re wondering, our neighbors in Thailand are indeed paying roughly RM5 for a liter of RON95 petrol, or <\/span>38.25 baht per liter<\/span><\/a> (at the time of writing).<\/span><\/p>\n

That\u2019s because Thailand is not a major oil producer, and thus petrol prices closely follow market prices. On the other hand, Malaysia is a major oil-producing and exporting country. So, it stands to follow that Malaysia\u2019s economy should do better when global oil prices are high, right? <\/span>Well, the situation is a little tricky since Malaysia subsidizes petrol and diesel<\/a> for its people.<\/span><\/p>\n

The Malaysian Fuel Subsidy Explained<\/span><\/h2>\n

Fuel prices at Malaysian pumps are <\/span>among the lowest in the world,<\/span><\/a> thanks to a generous petrol and diesel subsidy scheme.<\/span><\/p>\n

The government subsidizes RON95 petrol and diesel, while RON97 petrol is unsubsidized. The petrol price at the pump is calculated using the Automatic Pricing Mechanism (APM), a managed float system that, in theory, <\/span>should change every week<\/span><\/a> as it follows the market price of crude oil.<\/span><\/p>\n

To give an idea of the petrol and diesel prices in Malaysia without subsidy and just how much the government is subsidizing our fuel, let\u2019s look at the table below:<\/span><\/p>\n\n\n\n\n\n\n
Fuel<\/b><\/td>\nPrice at the pump per liter (RM)<\/b><\/td>\nMarket price per liter (RM est.)<\/b><\/td>\nGovernment subsidy per liter (RM est.)<\/b><\/td>\n<\/tr>\n
RON95<\/td>\n2.05<\/td>\n3.05<\/td>\n1.00<\/td>\n<\/tr>\n
Diesel<\/td>\n2.15<\/td>\n3.75<\/td>\n1.60<\/td>\n<\/tr>\n
RON97<\/td>\n4.00<\/td>\n4.00<\/td>\n0.00<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

*Unsubsidized price of RON95 as of May 2023 cited <\/span><\/i>here<\/span><\/i><\/a> and price of diesel as of October 2023 cited <\/span><\/i>here<\/span><\/i><\/a>.<\/span><\/i><\/p>\n

Read More:<\/b> How to Calculate Petrol Price in Malaysia<\/span><\/a><\/p>\n

Malaysians Lose When Oil Prices are High?<\/span><\/h2>\n

There have been discussions about whether to change or end the fuel subsidy scheme.<\/span><\/p>\n

Firstly, the fuel subsidy in Malaysia is an untargeted subsidy scheme, meaning that everyone enjoys the subsidy regardless of whether they are rich or poor. Take a look at these two drivers:<\/span><\/p>\n