Bangkok Post – Ending subsidies won’t stop fuel smuggling from Malaysia
1 min read

Bangkok Post – Ending subsidies won’t stop fuel smuggling from Malaysia

A smaller price difference means smugglers will try to sell more diesel to Thai customers to protect profits

Contraband fuel is transferred from a truck to a pickup truck in the Hat Yai district of Songkhla, where police caught the perpetrators of the crime on April 20, 2023, as part of a crackdown on fuel smuggling on the southern border.  (Photo: Royal Thai Police)

Contraband fuel is transferred from a truck to a pickup truck in the Hat Yai district of Songkhla, where police caught the perpetrators of the crime on April 20, 2023, as part of a crackdown on fuel smuggling on the southern border. (Photo: Royal Thai Police)

Malaysia expects smugglers to be even busier on the border with Thailand now that Kuala Lumpur has removed diesel subsidies.

Perlis police chief Muhammad Abdul Halim said smugglers would speed up their operations by buying more fuel from the Malaysian state to illegally sell it to customers in Thailand to compensate for the loss of margins. Times of new straits reported on Tuesday.

The gap in diesel prices between the two countries narrowed on Monday when the Malaysian government stopped subsidizing the fuel as it had become a fiscal burden.

“We believe that diesel and petrol smuggling syndicates will increase their operations by smuggling larger quantities of fuel to maintain high profits,” the state police chief said.

Perlis borders Satun and Songkhla provinces in Thailand. It is the main state connecting both countries.

Malaysia abolished diesel subsidies from Monday to shore up government finances and curb fuel smuggling. Diesel prices are now 3.35 ringgit (26 baht) per liter, up from 2.15 ringgit, without government financial support. The new price is still cheaper than diesel in Thailand, which is 32.94 baht.

95 RON petrol in Malaysia is also a bargain – it costs 2.05 ringgit (15.97 baht) compared to 37.35 baht for Gasohol 95 in Thailand.

Smuggling is also detected in the Malaysian states bordering Singapore and Indonesia, where fuel prices are much higher. The price per liter of diesel in ringgit is 4.37 in Indonesia and 8.87 in Singapore.