Page last updated at 15:36 GMT, Tuesday, 27 May 2008 16:36 UK

Malaysia fuel ban for foreigners

Motorists fill up their vehicles with gasoline at a petrol station in Subang, Malaysia, Tuesday, May 27, 2008
Heavy subsidies keep petroleum costs low in Malaysia

Malaysia is to restrict fuel sales to foreign motorists on its borders in an attempt to curb the spiralling cost of government subsidies.

Hundreds of Thai and Singaporean motorists cross the border every day to fill up on cheap petrol and diesel.

The ban, due to take effect on Friday, will be lifted as soon as prices can be set at market level, officials said.

Malaysia has some of Asia's lowest fuel prices due to high government subsidies.

"Taxpayers' money is being used to subsidise petrol for those who are not entitled to receive the subsidy," Malaysia's Deputy Prime Minister Najib Razik said.

"[Foreigners] should not take advantage of our subsidy scheme," he added.

Subsidies are expected to cost the Malaysian government 45bn ringgit (US$ 14bn; 7bn) this year as oil prices rise worldwide.

The government is considering a series of measures to address the problem of rising subsidies, including selling petrol and diesel at market prices.

Malaysia's trade minister Shahrir Samad said other proposals included cash remunerations for Malaysian motorists and a distribution system involving identity cards.

Until the ban is lifted, those who break the new ruling could be fined or face a jail term.

"It's a very harsh decision," Alang Zari Ishak, president of a local petroleum dealers' association, told the Associated Press News Agency. He added that the ban may affect tourism and relations with Malaysia's neighbours.

The Indonesian government last week raised fuel prices by nearly 30%, prompting fears of widespread unrest.


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