The government will lower the subsidised price of diesel for Malaysians to RM2.10 per litre from July 1, 2026, as part of a nationwide overhaul of fuel subsidy targeting, Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim announced in Bintulu, Sarawak.
The Finance Ministry (MOF) said in a statement that the move will be implemented through a restructured diesel subsidy mechanism using MyKad verification, ensuring a uniform system across the country, in line with the RON95 fuel subsidy framework.
Under the new approach, Anwar said eligible Malaysians will continue to enjoy subsidised diesel at a standardised price nationwide, while non-citizens and ineligible users will be required to pay market-based rates without subsidies.
Anwar said the reform is designed to ensure that fuel subsidies are delivered directly to Malaysians while reducing leakages and smuggling, particularly given ongoing volatility in global oil markets driven by geopolitical tensions in West Asia.
“The subsidy will be channelled directly to Malaysians through MyKad verification, ensuring only eligible groups benefit,” he said, adding that the system would remove distortions created by price gaps between subsidised and unsubsidised diesel.
Currently, diesel is sold at RM2.15 per litre in Sabah and Sarawak, while the unsubsidised retail price in Peninsular Malaysia stands at RM4.37 per litre, creating what the government described as significant arbitrage opportunities for leakages and cross-border smuggling.
Under the new harmonised structure, retail diesel prices in Sabah and Sarawak will be aligned with Peninsular Malaysia’s framework, while eligible Malaysians in the two states will see a slight reduction from RM2.15 to RM2.10 per litre.
At the same time, foreigners will no longer be entitled to subsidised diesel under the revised system.
MOF said further details on the implementation of the targeted diesel subsidy reform will be announced by Finance Minister II Datuk Seri Amir Hamzah Azizan on June 22, 2026.
