KUALA LUMPUR - Malaysia has launched a new targeted fuel subsidy initiative, BUDI95, which came into effect on 30 September 2025.

This scheme limits subsidised RON95 petrol, which is priced at RM1.99 per litre strictly to Malaysian citizens.

Foreigners, including migrant workers, international students, expatriates, and permanent residents, must now pay the unsubsidised market price of RM2.60 per litre for RON95 petrol.

On 29 September, the Finance Ministry said only Malaysian citizens are eligible for the lower subsidised fuel price under the new BUDI95 scheme.

“With the implementation of the BUDI MADANI RON95 (BUDI95) programme, the retail price of unsubsidised RON95 is set at RM2.60 per litre,” the ministry said in a statement.

The government estimates that eligible Malaysians could receive up to RM183 worth of fuel subsidies per month, based on a 300-litre consumption cap.

Meanwhile, Transport Minister Anthony Loke said that nearly 900,000 non-Malaysians holding valid local driving licences will no longer be eligible for subsidised fuel.

“There are 878,279 non-Malaysians holding Malaysian driving licences, including 18,710 permanent residents.

“All this while, our government has been subsidising petrol for almost 900,000 foreigners,” he said, as quoted from Free Malaysia Today.

For employers in sectors such as logistics, construction, and agriculture, where migrant labour is heavily relied upon, the increased transport costs could lead to higher operating expenses.

The Finance Ministry added that it will continue to monitor global crude oil prices and adjust the retail price of RON95 accordingly.

Other fuel prices remain unchanged: RON97 at RM3.21 per litre, and diesel at RM2.93 per litre in Peninsular Malaysia and RM2.15 in Sabah, Sarawak, and Labuan.

Reactions among foreign residents have largely been understanding, with many acknowledging the government’s focus on citizens.

Somali national Faisal Abdi Ali said he understands that the government needs to focus on its own people.

"For foreigners, it is normal to pay a higher price. I think this approach is fair," he told Bernama.

Meanwhile, Chinese student Shueb Ibn Abbas said the removal of the subsidy affected him, but it would be unfair for foreigners to question the measure, as it is a right intended for the country’s citizens.

Economist and senior fellow at Institut Masa Depan Malaysia, Datuk Dr Madeline Berma, said that the policy strengthens public trust and fiscal responsibility.

“For taxpayers, it increases disposable income and reduces economic burden.

“It also improves taxpayers' perception of where their taxes go to and strengthens their moral obligation to pay them,” she told New Straits Times.

BUDI95 marks a significant shift from broad fuel subsidies to a more targeted, citizen-centric approach, with the economic impact now being felt by Malaysia’s large foreign resident population.