11-6-2024 (KUALA LUMPUR) In a move expected to intensify smuggling activities along the Thai-Malaysian border, the Malaysian government has announced an end to diesel subsidies, citing fiscal constraints and the need to curb illicit fuel trade. Authorities in the northern state of Perlis, which shares a porous border with Thailand, have raised concerns over the potential surge in smuggling operations.
“We anticipate that diesel and petrol smuggling syndicates will escalate their operations, smuggling out larger volumes of fuel to maintain high profits,” warned Muhammad Abdul Halim, the Perlis police chief, in a statement to the New Straits Times. Perlis, a strategic gateway linking the two nations, has long grappled with fuel smuggling owing to the price disparities between the countries.
The lifting of subsidies, effective Monday, has resulted in a significant price hike for diesel in Malaysia, from 2.15 ringgit per litre to 3.35 ringgit. While this new price remains cheaper than Thailand’s 32.94 baht per litre, the narrowed gap is expected to incentivise smugglers to ramp up their illegal operations.
“Smugglers will undoubtedly be busier along the border now that Kuala Lumpur has ended diesel subsidies,” said Ahmad Zahid, a local journalist with expertise in regional security issues. “The price difference, though diminished, still presents an opportunity for lucrative profit margins, enticing smugglers to capitalize on the situation.”
Beyond the Thai border, Malaysian authorities have also detected smuggling activities in states bordering Singapore and Indonesia, where fuel prices are substantially higher. The price per litre of diesel in ringgit terms is 4.37 in Indonesia and a staggering 8.87 in Singapore, further exacerbating the problem.
The Malaysian government’s decision to remove diesel subsidies, while fiscally prudent, has reignited concerns over the persistent challenges posed by fuel smuggling syndicates. Law enforcement agencies have vowed to intensify border patrols and enhance cooperation with neighbouring countries to combat the illicit trade effectively.
