KUALA LUMPUR (Oct 5): The federal government's subsidy spending fell 40.1% to RM23.43 billion in 2025 from RM39.10 billion a year earlier, mainly because of a drop in petroleum subsidies, according to the latest Auditor General’s report released on Monday.
Over the same period, spending on grants and aid for the welfare of individuals and families rose to RM20.36 billion from RM4.24 billion.
Petroleum product subsidies fell RM15.79 billion, or 45.2%, to RM19.11 billion. The report attributed the reduction to lower crude oil prices and to the targeting of diesel subsidies from June 2024 and petrol subsidies from September 2025. Crude oil averaged US$69.05 per barrel in 2025, against US$80.82 per barrel in 2024.
Subsidies are paid based on the difference between the government-set selling price and the actual market price of the product.
By product, the petrol subsidy fell 46.5% to RM10.51 billion and the diesel subsidy fell 48.2% to RM5.98 billion.
The diesel figure includes RM430.35 million paid to Sabah Electricity Sdn Bhd as a fuel subsidy. The liquefied petroleum gas subsidy declined 29.1% to RM2.63 billion.
Among other subsidies, spending on food aid and supplementary food rose 1% to RM2.51 billion. The cooking oil price stabilisation scheme accounted for the largest share at RM1.94 billion, compared with RM1.95 billion in 2024.
Toll compensation increased 19.5% to RM917 million, covering amounts payable to highway concessionaires because of deferred toll rate increases and festive season toll discounts.
Subsidies for Keretapi Tanah Melayu (KTM) and Malaysia Airlines (MAS) rose to RM280.68 million and RM255.84 million respectively, up 21.7% and 9.6%.
The subsidy for electricity to large domestic-oriented industries fell 50.5% to RM229.93 million, which includes RM10.24 million for the RM40 electricity bill rebate programme, with the balance paid to Sabah Electricity.
A paddy price subsidy of RM111.13 million was recorded in 2025, with no spending in 2024.
Separately, an egg subsidy of RM484.66 million, which ended on Aug 1, 2025, was recorded under grants to companies rather than the subsidy line. Grants to companies fell 79.1% to RM2.49 billion from RM11.92 billion.
Spending on grants and aid for the welfare of individuals and families rose by RM16.13 billion, or 380.8%.
The report cited disbursements under the Sumbangan Asas Rahmah (Sara), Sumbangan Tunai Rahmah (STR) and Budi Madani programmes, as well as STR operating costs. Cash aid under Sara, STR and Budi Madani totalled RM15.51 billion, comprising RM8 billion for STR, RM7.11 billion for Sara and RM400 million for Budi Madani.
Total domestic grants, which include subsidies and welfare aid, fell 4.5% to RM97.06 billion from RM101.59 billion.
In its reply to the audit on federal debt, the Ministry of Finance said it was targeting diesel and RON95 subsidies so that savings could be channelled to programmes supporting vulnerable groups, including STR and Sara.
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