Malaysia to ban border fuel sales to foreigners
Posted: 27 May 2008 1252 hrs

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KUALA LUMPUR: Malaysia will ban petrol stations on its borders with Thailand and Singapore from selling fuel to foreigners, in an attempt to contain the spiralling cost of subsidies, reports said on Tuesday.

"It's the question of principle because you are talking about taxpayers' money, and taxpayers' money being used to subsidise petrol for those not entitled to receive the subsidy," said Deputy Prime Minister Najib Razak.

"Our level of subsidy is very high," he told a press conference.

Domestic Trade Shahrir Samad said the ban on sales to foreign vehicles would be enforced from Friday and remain in place until the government unveils a new mechanism for selling subsidised fuel to the public.

"This move is a stern act by the government to reduce the leak in subsidies that involves high costs and which should actually be enjoyed by the lower-income group in the country," he told the official Bernama news agency.

The ban affects up to 300 petrol stations, and extends up to 50 kilometres from the border in the northern states of Perlis, Kedah, Perak and Kelantan; and Johor in the south which faces Singapore.

The move comes as the government conducts a controversial review of its fuel subsidies, expected to cost 43 billion ringgit (13.6 billion US dollars) this year if oil prices hover around 120 US dollars per barrel.

Malaysia heavily subsidises petrol, diesel and gas as well as 21 food items but rising global prices and controls have triggered severe shortages, as well as smuggling across its porous borders and long coastline.

Singaporeans often make day trips across the causeway linking the island state to Malaysia to fill their petrol tanks and buy groceries, which are cheaper there.

Despite the urgent need to lower the subsidy bill, the government is braced for a public backlash over any further increase in a country where public transport is weak and many people are dependent on their cars.

The ruling coalition suffered its worst ever result in March 8 elections, losing five states and a third of parliamentary seats in a setback partly credited to anger over high prices of food and fuel. - AFP/ac/de