Malaysia to curb fuel sales to foreigners

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(China Daily)
Updated: 2008-05-28 07:49

Malaysia will temporarily curb petrol and diesel sales to foreign motorists to prevent abuse of subsidies, and the ban will be lifted once prices are gradually set at market level, the domestic trade minister said.

The government is planning a new fuel subsidy mechanism that will eventually allow petrol and diesel to be sold in the country at market prices, Shahrir Samad told reporters at parliament building yesterday.

He said a committee, led by the finance ministry, is studying various proposals to ease off the subsidy on the country's fuel, but did not give a timeframe for implementation.

"I think this will eventually happen, but only when we sort out a more comprehensive and complete subsidy management system. We need to ensure that the subsidies reach Malaysians and groups within the country who qualify," he said.

Shahrir said among proposals under consideration include cash remunerations, a quota system and a distribution system using identity cards.

Bernama news agency had quoted the minister as saying late on Monday that 200 to 300 filling stations in Malaysian towns bordering Singapore and Thailand will be barred starting Saturday from selling fuel to non-Malaysian registered vehicles.

Hundreds of Thai and Singapore motorists cross into Malaysia daily to seek cheaper diesel and petrol and the move could hamper tourism and upset retailers near the border areas.

"It will be removed when the new subsidy mechanism is put in place to replace the existing scheme where everyone is subsidized," Shahrir later said.

Malaysia, a non-OPEC oil producer and net exporter, has some of Asia's lowest diesel and petrol prices due to high government subsidies - seen hitting a record of $15.52 billion this year, as crude touched all-time peaks above $135 a barrel last week.

Indonesia raised fuel prices by an average of 28.7 percent from Saturday, Sri Lanka did so a day later and Bangladesh said it planned an increase soon while India is considering the move.

In the case of Thailand, the ban will apply to petrol stations located within 30-50 km of the Malaysian border with its northern neighbor, Shahrir said on Monday after a meeting to combat inflation, which is at a 15-month high.

The move to limit fuel sales to foreign motorists is more stringent than an earlier proposal to make them pay unsubsidized rates.

Agencies

(China Daily 05/28/2008 page11)