Federal subsidy spending falls 40.1% to RM23.43 billion in 2025
Welfare grants and aid reached RM20.36 billion, while lower petroleum subsidies drove the decline in overall subsidy spending.
Malaysia’s federal government spent RM23.43 billion on subsidies in 2025, a 40.1% reduction from the RM39.10 billion recorded in 2024, according to the Auditor General’s report. Petroleum subsidies accounted for most of the decline.
The report put petroleum product subsidies at RM19.11 billion, down 45.2%, or RM15.79 billion. It linked the fall to cheaper crude oil and targeted subsidies for diesel introduced in June 2024 and petrol in September 2025. Average crude prices were US$69.05 per barrel in 2025, compared with US$80.82 per barrel in 2024.
Petrol subsidies amounted to RM10.51 billion after a 46.5% decline, while diesel subsidies dropped 48.2% to RM5.98 billion. Liquefied petroleum gas subsidies were RM2.63 billion, a reduction of 29.1%.
Meanwhile, grants and aid supporting individuals and families increased to RM20.36 billion, compared with RM4.24 billion previously. The report cited payments through Sumbangan Asas Rahmah (Sara), Sumbangan Tunai Rahmah (STR) and Budi Madani, alongside STR operating costs.
Cash assistance across those programmes amounted to RM15.51 billion. STR accounted for RM8 billion, Sara for RM7.11 billion and Budi Madani for RM400 million.
Domestic grants overall, including subsidies and welfare assistance, declined 4.5%, reaching RM97.06 billion against RM101.59 billion previously. In its response to the federal debt audit, the Ministry of Finance said targeting diesel and RON95 subsidies was intended to redirect savings towards support for vulnerable groups, including STR and Sara.
