Lead economist Apurva Sanghi said the recent quota cut under the BUDI95 scheme was “a step in the right direction” but noted that fuel subsidies remain regressive, with higher-income groups consuming disproportionately more than the 200-litre monthly limit, The Edge reported.

He added that adjusting petrol prices could serve as an alternative or complementary policy tool, especially as the US-Israel and Iran conflict shows no sign of ending.

“If the situation continues to worsen, there has to be some adjustment,” he said during a media briefing on Part 1 of the April 2026 Malaysia Economic Monitor (MEM) report.

“Given how the system is set up, it would be relatively easy to tweak … whether through quotas or prices.”

He also noted that the government has kept fuel prices low to avoid “demand destruction”, unlike Thailand and the Philippines, where higher prices have visibly curtailed consumption.

“The question is, how long can the government continue to protect demand … and that is an open-ended question as of now,” he said.

Despite the fact that Brent crude now costs more than US$100 per barrel, Malaysia has decided to maintain the price of subsidised RON95 at RM1.99 per litre.

However, this has resulted in the subsidy bill jumping from RM700 million in January 2026 to RM4 billion in April.

To manage costs, the government temporarily reduced the monthly quota for subsidised fuel under the BUDI95 scheme from 300 litres to 200 litres.

Apurva also contended that there is no immediate need for a broad fiscal stimulus, including large-scale subsidies, as it could add to inflationary pressures.

He said Malaysia is currently in a “sweet spot” of relatively strong growth and contained inflation.