RON95 subsidy based on vehicle registration, not citizenship

RON95 subsidy based on vehicle registration, not citizenship

KUALA LUMPUR: Malaysians driving foreign-registered vehicles are not allowed to buy RON95 petrol as the fuel subsidy is linked to vehicle registration, not the driver’s nationality.

Domestic Trade and Cost of Living Ministry enforcement director-general Datuk Seri Azman Adam said the restriction was part of Malaysia’s long-standing fuel subsidy control framework, which was aimed at preventing leakages, particularly in border states where price differentials made smuggling and arbitrage lucrative.

“The ban on selling RON95 to all foreign-registered vehicles, including motorcycles, has been in effect since June 17, 2022, and remains in force.

“The policy ensures fuel supply is prioritised for Malaysian motorists and helps prevent abuse or misrepresentation that could affect quotas or lead to leakages.”

Azman added that the restriction addressed operational challenges at petrol stations, where verifying the identity of drivers could be difficult, especially with third-party apps.

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“Even with RON95 prices now liberalised, the ban continues to prevent diversion and ensure sufficient supply for Malaysians.”

Petrol station operators said allowing Malaysians in foreign-registered vehicles to pump RON95 would require real-time identity verification, which was operationally impractical, costly and vulnerable to abuse, especially at high-volume petrol stations.

It is understood that allowing Malaysians to fuel RON95, instead of vehicle-based registration, would create a loophole easily exploited by syndicates.

For example, syndicates could use foreign-registered vehicles to siphon subsidised fuel for resale or cross-border smuggling.

Hence, all foreign-registered vehicles, regardless of whether they are driven by Malaysians or foreigners, are allowed to purchase only unsubsidised fuels, such as RON97 or diesel, at market prices.

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This policy ensures consistency in enforcement, preventing disputes at petrol stations and reducing the burden on operators, who are not authorised to verify citizenship documents.

The government has stressed that the measure against foreign-registered vehicles was not discriminatory, but a necessary safeguard to protect public funds, with fuel subsidies costing billions of ringgit annually.

Malaysia remains one of the few countries in the region to maintain broad fuel subsidies, and the government has warned that without strict controls, subsidy leakages would significantly undermine the country’s fiscal sustainability.