The fuel subsidy is a little more transparent now, can we do the same with the vehicle taxation structure now?
Last week, the Budi95 targeted fuel subsidy policy officially rolled out. For the first time, Malaysians are required to present their ICs at the pump to enjoy cheaper-than-market petrol. Under this scheme, each Malaysian IC holder with a valid driver’s licence is entitled to RM200 or 300 litres of RON95 petrol per month, calculated at the new subsidised rate of RM1.99 per litre.
Once that quota is used up, the price reverts to RM2.60 per litre—higher than before, but still well below global fuel prices. In Singapore, for example, petrol is currently priced at just under RM9 per litre at prevailing exchange rates.
While many Malaysians are broadly accepting of this change, the new system does have flaws that deserve attention. More importantly, this transition presents an opportunity for both the government and the rakyat to reset how we think about subsidies and transparency. This thought struck me as I observed Bo’s experience with the new payment process.
1. Prepayment and Price Display Confusion
The new system requires motorists to prepay for fuel, after which the pump displays the unsubsidised price. For example, if you pay RM10 for fuel at RM1.99/L, the pump will show that you’ve received RM13.08 worth of fuel.
Why? Because the pumps are set to a default price of RM2.60 per litre. If you exceed your monthly quota—or don’t have an IC but drive a locally registered vehicle—you’ll be charged at that higher rate.
The problem is twofold. On the one hand, it’s a clever way for the government to remind us how much subsidy we’re benefiting from. On the other hand, it can confuse or alarm motorists. I’ve already heard of people panicking and hanging the nozzle back when they hit their prepaid limit. Worse, there seems to be no refund mechanism for unused prepaid credit—an unnecessarily frustrating oversight.
This refund issue needs to be fixed immediately. It creates a poor user experience and makes the government look unprepared for a rollout they’ve supposedly been testing for months.
2. Transparency Should Work Both Ways
The other interesting aspect is how the display of unsubsidised prices creates a new level of transparency. If the government truly wants to be open about subsidies, perhaps it’s time to apply that transparency to taxes and duties on new vehicles as well.
For years, car prices in Malaysia have been shaped by opaque, tailor-made taxation structures based on a brand’s investment and localisation commitments. Many consumers still assume the government sets car prices directly. But increasingly, some brands are pricing more aggressively, leveraging loopholes or preferential treatment to gain a competitive edge.
Meanwhile, fully imported EVs currently enjoy exemptions from excise duties and import taxes—making their pricing more transparent. Consumers can now clearly see the mark-ups imposed by local distributors.
3. A Step Toward Honest Pricing
This new fuel policy has unexpectedly introduced Malaysians to a small but meaningful layer of pricing transparency. It shows us how much subsidy we receive at every pump. But transparency shouldn’t stop there.
If the government is serious about helping Malaysians understand where their money goes, it should also reveal how much tax and duty is baked into the price of new vehicles. That would be a far more honest and empowering approach to policy.
