Savings from the targeted diesel subsidy are channelled into programmes like STR and SARA, not kept as surplus, says the finance ministry.
KUALA LUMPUR: Savings generated from the targeted diesel subsidy mechanism are not being retained solely as a fiscal surplus, but are instead utilised to strengthen targeted assistance programmes, according to the Ministry of Finance (MOF).
The ministry said the savings have been used to strengthen programmes such as the Sumbangan Tunai Rahmah (STR), Sumbangan Asas Rahmah (SARA) and various other initiatives, while supporting ongoing price monitoring and enforcement efforts to ensure subsidies and assistance reach their intended recipients and minimise leakages.
“The government will continue to monitor the implementation of the BUDI MADANI Programme and carry out appropriate improvements from time to time to ensure that assistance is distributed fairly, effectively, and in a targeted manner to those truly in need,” the MOF said in a reply to the Dewan Negara published on the Parliament website.
The ministry said this in response to a question from Senator Mohd Hasbie Muda on the government’s follow-up measures after setting the subsidised diesel price at RM2.10 per liter, aimed at ensuring that the reduction in operating costs translates into lower prices for goods and services.
It said that the targeted diesel subsidy implemented under the revamped BUDI MADANI Diesel (Budi Diesel) programme has delivered two key outcomes — ensuring the continued availability of diesel supply in the domestic market while allowing eligible Malaysians to continue purchasing diesel at a lower price.
“The revamp is expected to result in subsidy savings of up to RM2 billion annually, enabling the government to channel part of the savings towards reducing the subsidised diesel price from RM2.15 to RM2.10 per litre,” the ministry said.
The MOF said this in reply to a question from Senator Datuk Nelson W. Angang on steps taken by the government to ensure that implementation of the targeted diesel subsidy does not burden the logistics sector and rural communities in Sabah and Sarawak, and the national economic performance amidst global geopolitical pressures.
On June 22, the government announced the standardisation of diesel prices and subsidy mechanisms nationwide, effective July 1, 2026, allowing eligible Malaysians to purchase subsidised diesel at RM2.10 per litre through the Budi Diesel programme.
