Malaysia is expecting smugglers will be even busier along the border with Thailand now that Kuala Lumpur has ended diesel subsidies.
Perlis police chief Muhammad Abdul Halim said smugglers would accelerate their operations by buying more fuel in the Malaysian state to illegally sell to customers in Thailand to make up for the loss of margins, the New Straits Times reported on Tuesday.
The diesel price difference between the two countries narrowed on Monday when the Malaysian government stopped subsidising the fuel as doing so had become a fiscal burden.
“We believe that diesel and petrol smuggling syndicates will scale up their operations, smuggling out larger volumes of fuel to maintain high profits,” the state police chief was quoted as saying.
Perlis borders Satun and Songkhla provinces in Thailand. It is the main state linking the two countries.
Malaysia ended diesel subsidies from Monday to shore up government finances and curb fuel 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 price is still cheaper than diesel in Thailand which 32.94 baht.
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.
Smuggling is also being detected in Malaysian states bordering Singapore and Indonesia, where fuel prices are much higher. The price per litre of diesel in ringgit terms is 4.37 in Indonesia and 8.87 in Singapore.