Treasury secretary-general Johan Mahmood Merican said it is important for the government to create a mechanism that reduces subsidy leakages.

“The government remains committed to ensuring Malaysians continue to benefit from subsidies.

“The specifics of the mechanism are still being refined and need to be finalised, which is why Prime Minister Anwar Ibrahim announced that implementation will take place around the middle of next year,” he said.

He said this to reporters on the sidelines of the post-Budget 2025 debate organised by the Malaysian Economic Association (MEA) today.

Also present was MEA president Yeah Kim Leng.

The dialogue was moderated by the Malaysian Institute of Economic Research board of trustees’ chairman Sulaiman Mahbob, and the list of panellists included the Malaysian Inclusive Development and Advancement Institute director Noor Azlan Ghazali and AmBank Group chief economist Firdaos Rosli.

Comparing the RON95 mechanism to the diesel subsidy mechanism, Johan said that there is a possibility that it would replicate the fleet cards mechanism under the Subsidised Diesel Control System (SKDS).

He emphasised that the key benefit of having the pump price at the market price was that it immediately resulted in a reduction of leakages.

“We saw that there were leakages (after the introduction of the diesel subsidy mechanism), not just across the border, but also to industry, which really should be buying at commercial prices.

“However, we saw a 30% reduction in diesel being sold at petrol stations and also an increase in commercial business sales, which shows that both matters are being addressed,” he added.