Malaysia's diesel subsidy reform
Malaysia implements nationwide MyKad-based diesel subsidy at RM2.10 per litre from July 2026
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Key Points
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Anwar announced the reform in Bintulu at a cheque presentation ceremony that coincided with the change in status of Bintulu Port from a federal port to a state port, according to Bernama via Scoop.
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Anwar said on Facebook that the subsidised diesel price reduction would be implemented “uniformly nationwide through the use of MyKad,” and he added that the government would maintain RON95 at RM1.99 per litre.
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MOF specified the current price gap driving leakage: subsidised diesel is RM2.15 per litre in Sabah and Sarawak, while the unsubsidised retail price in Peninsular Malaysia is RM4.37 per litre—highlighting the large differential the reform is meant to address.
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MOF said the enhanced programme will align diesel market pricing in Sabah and Sarawak to Peninsular Malaysia’s market conditions; as a result, non-Malaysians in Sabah and Sarawak would “no longer enjoy the subsidised price.”
Malaysia will cut its subsidised diesel price to RM2.10 per litre nationwide starting July 2026, Prime Minister Anwar Ibrahim announced on June 21 in Bintulu, Sarawak. The new price replaces a patchwork system where diesel cost RM2.15 per litre in Sabah and Sarawak, while the unsubsidised market price in Peninsular Malaysia stood at RM4.37 per litre, according to MOF via Scoop.
Starting July, only eligible Malaysians verified through their MyKad — the national identity card — will get the subsidised rate at the pump. Non-citizens and ineligible buyers must pay the full market price. Finance Minister II Amir Hamzah Azizan is set to reveal technical details on June 22, Dayak Daily reported.
MyKad Swipe Replaces Geography as Subsidy Gate
The new system works like the existing BUDI Madani RON95 scheme, known as BUDI95. Instead of using location to decide who gets cheap fuel, petrol stations will verify eligibility in real time using a customer's MyKad. Anwar said on Facebook that the subsidy will be delivered "uniformly nationwide through the use of MyKad," according to Scoop.
The government will also keep RON95 petrol at RM1.99 per litre. That price is unchanged. The Ministry of Finance said non-citizens and ineligible parties — including foreign nationals in Sabah and Sarawak — will "no longer enjoy the subsidised price" and must pay RM4.37 per litre at the pump, Head Topics reported.
East Malaysia Gets a Lower Price, a Unified System
For Sabah and Sarawak residents, the change is a small price drop — from RM2.15 to RM2.10 per litre — paired with a bigger structural shift. For the first time, the subsidised price and the delivery method are identical across Peninsular Malaysia, Sabah, and Sarawak. The MOF said it will align diesel market pricing in East Malaysia to Peninsular conditions, according to Dayak Daily.
Anwar made the announcement in Bintulu during a ceremony that also marked the transfer of Bintulu Port from federal to state jurisdiction. The timing was deliberate. Local outlets treated the port handover as the headline, with the diesel price acting as a complementary gesture to East Malaysian states, Scoop noted.
Subsidy Leakage and Smuggling Drove the Reform
The core problem was a price gap too wide to ignore. Subsidised diesel at RM2.15 in Sabah and Sarawak versus an unsubsidised price of RM4.37 in Peninsular Malaysia created a spread of more than RM2 per litre. That gap made it profitable to buy fuel cheap in East Malaysia and sell it elsewhere. The MOF cited this leakage and rising supply pressures from instability in West Asia as key reasons for the change, according to Head Topics.
The MyKad requirement makes bulk buying at the pump much harder for smuggling networks. However, the incentive has not disappeared entirely. A gap of roughly RM2.27 per litre still separates the subsidised price of RM2.10 from the market rate of RM4.37. Anwar said the reform ensures "national wealth is not stolen by those who do not deserve it," according to Scoop.
June 22 Briefing Will Fill In Critical Blanks
Many practical questions remain unanswered. Finance Minister II Amir Hamzah Azizan will hold a technical briefing on June 22 to explain how MyKad readers will connect to petrol station point-of-sale systems. Consumer groups have already called for offline backup options in remote parts of Borneo where internet connectivity is unreliable, Dayak Daily reported.
Analysts are also watching whether the government will cap the number of litres each MyKad holder can buy at the subsidised rate — a detail that could close remaining loopholes. The BUDI95 rollout for RON95 served as the test run for this kind of system. How the July diesel launch goes will likely decide whether the government pushes the MyKad model further across other fuel types, according to Head Topics.
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