Malaysia’s targeted fuel subsidy plan is once again under the spotlight as the government moves closer to restructuring the long-standing RON95 subsidy system with higher-income earners expected to be the most affected.
Govt may remove RON95 subsidy for higher-income groups
According to recent news, the government is considering limiting subsidized RON95 fuel mainly to Malaysians who genuinely need it, while wealthier households particularly the T20 group may no longer enjoy the same subsidized rates.
Prime Minister Datuk Seri Anwar Ibrahim says the proposal is still being refined and is expected to be finalized soon.
Economists estimate that removing the T20 group from the Budi95 subsidy scheme could potentially save the government as much as RM1.5 billion every month.
What exactly are B40, M40 & T20?
In Malaysia, households are grouped into three main income categories based on monthly household income data collected by the Department of Statistics Malaysia (DOSM). These categories are known as:
- B40 – Bottom 40% income group
- M40 -Middle 40% income group
- T20 – Top 20% income group
1. B40 (Lower-income households)
The B40 category refers to households earning below RM5,250 per month.
This group is typically the main recipient of government assistance programmes such as:
- Sumbangan Tunai Rahmah (STR)
- Sumbangan Asas Rahmah (SARA)
- Public housing initiatives
- Healthcare assistance schemes
2. M40 (Middle class)
The M40 group represents households earning between RM5,250 and RM11,819 monthly.
Often described as Malaysia’s “middle class,” this group usually receives limited or conditional government aid.
3. T20 (Top-tier)
T20 households earn above RM11,820 per month and are generally considered the country’s higher-income group.
Two sub groups of T20:
| Household groups | Income range (RM) |
| T1 | 11,820 – 15,869 |
| T2 | 15,870 and above |
Why the subsidy debate is so controversial
The proposed subsidy cut has caused varied opinions from the Malaysian population.
Many Malaysians arguing that not all T20 households are “rich”, especially those living in major cities with high expenses.
“The T20 are the largest contributors to income tax. The incentive of income tax relief is diminishing. Not all T20s are wealthy households,” said a 53-year-old mother of two.
Other users on social media argued that the T20 classification only requires a household income of RM11,820 or above, adding that a couple earning RM5,910 each per month could hardly be considered “rich,” especially if they are raising one or two children.
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