Amir Hamzah: RON95 Subsidy Coming Reform Before 2026 Carbon Tax

The Malaysian government will focus on reforming fuel subsidies for RON95 petrol before rolling out a carbon tax in 2026, said Finance Minister II, Datuk Seri Amir Hamzah Azizan.

He explained that Malaysia must first address long-standing issues in its energy subsidy system before adding new climate-related taxes.

The carbon tax, which was announced in Budget 2025, is expected to target high-emission industries such as iron, steel, and energy. However, Amir Hamzah said some groundwork needs to be done first.

“We can’t be taxing carbon emissions while still heavily subsidising petrol and diesel. It creates a contradiction in our policies,” he said.

He shared these thoughts during a panel session titled "Delivering Malaysia’s Energy Transition" alongside Deputy Minister of Energy Transition and Water Transformation, Akmal Nasrullah Mohd Nasir.

Amir added that phasing out subsidies is key to building a more consistent and sustainable policy framework.

He said the government plans to introduce climate action frameworks, better measurement tools, and eventually, the carbon tax itself, however all this can only be done after subsidy reforms are in place.

“This transition has to be system-wide. We can't rely on one-off policies or scattered announcements,” he said. “Everything must be aligned.”

This announcement comes just a day after Prime Minister Datuk Seri Anwar Ibrahim reassured the public that the upcoming changes to RON95 pricing would not impact 85 to 90 percent of Malaysians.

Anwar also stressed that subsidy rationalisation is necessary to ensure public funds are used more effectively, especially to support lower-income groups.

Source: MalayMail