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June 2, 2008

Govt shelves plan to ban foreigners buying subsidised petrol

Malaysia has put off plans to ban foreign-registered vehicles from filling up on subsidised petrol in its border areas with Singapore and Thailand, Associated Press reported Sunday.

The ban was originally due to start Monday (June 2) at up to 300 stations within 30 miles (50 kilometers) of Malaysia's borders with the two countries, where gasoline costs up to twice as much.

But Deputy Prime Minister Najib Razak, who is in Singapore to attend a security summit, told reporters that an anti-inflation Cabinet committee would meet Tuesday to review the plan.

“We have to find a new effective date because there are other matters, like for example, can we have separate pumps because the Singaporeans are saying that they don't mind paying the market rate," he said.

The statement indicated that the government may allow foreigners to buy higher-priced fuel, whereas the earlier plan was to impose a total ban on foreigners buying fuel.

Najib declined to elaborate, only saying that the postponement was made following requests by Singaporeans.

The move is part of Malaysia's measures to curb soaring subsidies, which are expected to cost the government 45 billion ringgit ($14 billion) this year as global oil prices skyrocket.

Thousands of Singaporeans cross the border every day into Malaysia's southern Johor state, many of them to shop for groceries and to fill up on gasoline to take advantage of lower prices.

Many Malaysians who work in Singapore have also complained they should be allowed to enjoy subsidised rates for their Singapore-registered vehicles, he said. Many Thais also cross into Malaysia from the northern border to buy the cheaper fuel.

The government last raised prices for gasoline, diesel and liquefied petroleum gas in February 2006, when crude oil futures were near a then-record high of about $70 a barrel.

Crude oil prices recently breached $130 a barrel, piling new pressure on the Malaysian government's finances as it grapples with an economic slowdown and rising inflation.

Regular petrol in Malaysia costs 1.92 ringgit ($0.61) a liter, or 7.27 ringgit ($2.34) a gallon. In Singapore, the same grade petrol costs S$2.05 ($1.48) per liter, or S$7.76 ($5.63) per gallon. Thailand sells regular petrol at 31.59 baht ($1.01) a liter, or 120 baht ($3.87) per gallon.

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