KUALA LUMPUR (Nov 6): The government has decided to implement a two-tier pricing mechanism for the targeted RON95 petrol subsidy, Economy Minister Rafizi Ramli told Parliament on Wednesday.

Rafizi said this mechanism poses less risk to potential inflation compared to the cash transfer method, which is currently used by the government to subsidise eligible recipients of diesel-powered vehicles.

"The government's priority is to ensure inflation remains under control. If we used the cash transfer method, where the retail price of RON95 would fluctuate with the market, there is a risk that traders may use this as an excuse to increase prices of goods," the minister said during his winding-up speech on Budget 2025.

Under the two-tier pricing mechanism, the subsidised price for RON95 will be displayed at retail stations for eligible recipients, while those not eligible will have to pay the market price, Rafizi said.

"The mechanism is currently being refined by the Economy Ministry, which will handle backend verification of eligible recipients, while the Finance Ministry will manage the frontend operations at retail stations," he said.

When tabling Budget 2025, Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim announced that the targeted subsidy for RON95 petrol will be implemented mid-next year.

Anwar had stressed that the government will continue providing subsidies for 85% of Malaysians. This will mean that the top 15% of earners (T15) and foreigners will pay the market rate for RON95 petrol.

Rafizi said the government will use net disposable income, rather than household income, in identifying  the T15 group, as this provides a fairer assessment.

"The Economy Ministry and Finance Ministry are finalising details of the T15 group, which will be presented to the Cabinet for approval before being announced to the public," he said. 

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