Ending subsidies won’t stop fuel smuggling from Malaysia

Ending subsidies won’t stop fuel smuggling from Malaysia

Smugglers may try to sell more fuel to Thai customers in order to protect profits because of the narrow price gap.

Ending subsidies won’t stop fuel smuggling from Malaysia
In the Hat Yai city of Songkhla, where authorities detained offenders as part of a crackdown on energy smuggling on the southern boundary on April 20, 2023, contraband fuel is moved from a vehicle to a pickup truck. ( Photo: Royal Thai Police )

Now that Kuala Lumpur no longer offers oil incentives, Malaysia anticipates that traffickers will be even busier along the Thai-Tangai borders.

According to the New Straits Times on Tuesday, Perlis police chief Muhammad Abdul Halim predicted that traffickers may increase their functions by purchasing more energy in the Indonesian condition to fraudulently sell to buyers in Thailand to make up for the decline in profits.

The Indonesian government stopped subsidizing the fuel because doing so had become a governmental burden, which caused the diesel price difference between the two countries to narrow on Monday.

The state police chief was quoted as saying,” We believe that diesel and gasoline smuggling syndicates will scale up their operations, smuggling out larger volumes of fuel to maintain high profits.”

Perlis edges the counties of Satun and Songkhla in Thailand. It is the key state linking the two places.

Malaysia lifted fuel subsidies starting on Monday to support the government’s finances and stop energy smuggling. Diesel prices are now 3.35 ringgit ( 26 baht ) per litre, up from 2.15 ringgit, with no financial support from the government. The new cost, 32.94 baht, is still less expensive than fuel in Thailand.

RON95 petrol in Malaysia is also a bargain at 2.05 ringgit ( 15.97 baht ) compared with 37.35 baht for Gasohol 95 in Thailand.

In Malay states that border Singapore and Indonesia, where gas prices are significantly higher, is also being observed smuggling. The cost per gallon of gasoline in ringgit words is 4.37 in Indonesia and 8.87 in Singapore.