Malaysia Macro

Research evidence excerpt

Malaysia Macro

Flashnote

23 June 2026

Equity Strategy

Malaysia Macro ASEAN

Surprise reforms on diesel subsidies

Andrew

San, CFA

What's new

• The Government announced reforms to the diesel subsidy on 22 June.

Budi Diesel- key features From 1 July, BUDI Diesel targeted subsidy scheme will be implemented

nationwide, with eligible Malaysians being able to purchase subsidised diesel • ~700,000 private diesel vehicles owners to receive

at RM2.10/L. monthly fuel quota of 200L shared between diesel

and RON95, integrating with BUDI95.

• Pickup truck and SUV owners can apply for an

Why it matters extra 100L/mth.

• RM400 cash aid under the previous scheme will be

• The timing of this announcement comes as a surprise given that the replaced with the new BUDI Diesel scheme.

general direction of the Middle East conflict is heading towards a resolution • Commercial users under the Subsidised Diesel

and the recent softening of diesel prices would have reduced the urgency Control System (SKDS) remain in place, with

coverage extended to another 70k vehicles in

to bring about such a reform. Sabah and Sarawak.

• Furthermore, the timing comes as a surprise as we are potentially heading • The Government has quoted RM2b of annual

into an early general election, where we usually do not expect reforms being savings under this new scheme which is being

returned through the reduction in subsidised

brought about at this stage of the political cycle. diesel prices to RM2.10/L.

Þ We may see negative implications in terms of support for the

Weekly diesel prices - Peninsular Government in East Malaysia given that blanket subsidies are effectively Malaysia

taken away. However, it is a positive particularly for private diesel

users in Peninsular Malaysia. This is perhaps a calculated move by the 7.00