Cut fuel quota to drive real savings

 

Letter to Editor

WHEN the government first introduced a monthly quota of 300 litres for RON95 under the BUDI95 targeted subsidy framework, it was designed to cover nearly all Malaysians.

Official data showed that more than 99% of drivers consume below this level, with the average Malaysian using around 80 to 100 litres per month. The 300-litre threshold therefore provided a generous buffer, further supported by a reduction in pump price from RM2.05 to RM1.99.

In April, the quota was lowered to 200 litres in response to the escalating global energy crisis, while the price was maintained. This adjustment was largely accepted by the public, reflecting a shared understanding that the current situation is driven by global supply pressures beyond Malaysia’s control.

Even at 200 litres, close to 90% of users remain unaffected, as most Malaysians consume well below this level. The government’s decision was both necessary and responsible.

However, the scale and persistence of the current crisis suggest that this measure alone may not be sufficient. A more decisive approach is needed to encourage meaningful fuel savings and strengthen national resilience.

Malaysia’s fuel consumption remains structurally high. An estimated 10 million vehicles consume between 50 and 60 million litres of fuel daily, equivalent to about five to six litres per vehicle per day.

At the same time, the government continues to subsidise more than RM1.50 per litre of RON95, placing sustained pressure on public finances.

This is no longer a short-term fluctuation, but a prolonged period of global energy disruption.

In this context, stronger policy signalling is required. Reducing the quota further, from 200 litres to 150 litres per month, would be a more effective and equitable approach.

Unlike a blanket price increase, which affects all consumers regardless of usage, a quota adjustment introduces a degree of fairness.

Those who consume more fuel would bear a greater share of the adjustment, while the majority of Malaysians—who already consume less—would remain largely unaffected.

More importantly, a lower quota encourages meaningful behavioural change. It promotes more disciplined fuel usage through better planning, reduced non-essential travel and improved efficiency.

Small adjustments at the individual level, when multiplied across millions of users, can significantly reduce overall demand.

A price increase, by contrast, risks becoming a passive burden. While consumers may pay more, consumption patterns may not change significantly, particularly among higher-income groups. In such cases, fiscal pressure persists without meaningful demand-side correction.

This is why policy design matters.

A calibrated reduction to 150 litres would send a clear signal that Malaysia is acting early, responding decisively and sharing responsibility collectively. It reinforces the principle that resilience must be built ahead of impact, rather than in response to crisis.

Such a measure should be clearly communicated as temporary and responsive to global conditions. The objective is not to impose hardship, but to encourage prudent consumption and safeguard national resources.

Malaysia still has the advantage of acting from a position of relative strength. That position must be matched with foresight. In uncertain times, early and well-calibrated action can make a significant difference in managing both economic and fiscal risks. 

Mohd Nasir Hakimi
Petaling Jaya

The views expressed are solely of the author and do not necessarily reflect those of  MMKtT.

- Focus Malaysia.