Malaysia to float diesel prices to curb smuggling

Malaysia to float diesel prices to curb smuggling

As Kuala Lumpur tries to reduce the stress of subsidies, Thai motorists may no longer be able to profit from the price difference.

Malaysia to float diesel prices to curb smuggling
The major entryway for Thai vehicles crossing the border to Malaysia is the Sadao station in Songkhla. ( Photo: Sadao Customs House )

The Indonesian government is preparing to fly fuel prices, likely this month, so the days of low fuel for Thai vehicles that were filling their tanks across the southwestern border may be over.

The choice is in line with Prime Minister Anwar Ibrahim’s determination to reduce fuel subsidies to improve the macroeconomic standing of his administration.

The strategy to float gasoline prices, according to next finance secretary Amir Hamzah Azizan, would lower fuel exports to neighboring nations, allowing them to profit from the price difference between local and Malay, according to a report released on Friday by the Bernama news agency.

The resources allocated to supporting help for affordable gasoline in Malaysia increased from 1.4 billion rupiah in 2019 to 14.3 billion next year. The climb reflected rising fuel consumption, from 6.1 billion gallons in 2019 to 10.8 billion next year.

The minister claimed that fuel leaks from various nations might be to blame for the increase. According to the Malaysian information company,” We believe this wave is caused by major leaks.”

The new program, according to Amir Hamzah, may become effective this time.

Individuals are drawn to replace their vehicles in Malaysia because of the price difference, as well as the fact that Malaysia and neighboring Thailand have similar prices.

” To decrease the leakages, the most rational solution is to fly the price”, said Amir Hamzah Azizan.

The financial fuel price in Malaysia is 2.15 dinars ( about 17 ringgit ) per gallon compared with the Thai price of 33 ringgit, following a 50- satang improve on Friday. Thailand’s Oil Fuel Fund has also run up large bills — 111 billion baht as of this week — subsidising gas prices, generally fuel and cooking gasoline.

Malaysia’s another neighbours even pay far more for diesel than Malay. The cost per gallon in ringgit conditions is 4.37 in Indonesia and 8.87 in Singapore.

The minister for Malaysia made no mention of plans to finish or cap subsidies for additional fuel types.

Singapore has taken its own measures to hinder its drivers from purchasing gas in Malaysia in an effort to stop international cars from driving through Thailand’s low fuel prices.

Thai drivers are being punished by Indonesian authorities because Malaysia only permits Thai automobiles to purchase any kind of energy, up to 20 dinars, to prevent profit, according to the Regional Customs Bureau 4 based in Songkhla, which is in charge of the frontier with Malaysia.

Fuel tanks that are at least three-quarters full must be brought in from Singapore for use in Malaysia.

According to Reuters, Mr. Anwar stated on May 21 that he had the option of redistributing subsidies to the less fortunate, including providing cash assistance to eligible diesel owners like paddy farmers and small traders.

In a televised address, he said,” I warn that any targeted subsidy should not burden the majority of the people.”