Malaysia’s diesel smugglers lament subsidy cut hurting profit - ‘not worth the trouble’

Malaysia’s new subsidy scheme has led to a surge in diesel prices and forced smugglers to rethink their illicit business in Thailand

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The latest diesel price is seen at a filling station in Kuala Lumpur, Malaysia, on Monday. Photo: EPA-EFE

Published: 5:57pm, 13 Jun 2024Updated: 3:10pm, 14 Jun 2024

Malaysia’s diesel smugglers are feeling the squeeze after the removal of a blanket subsidy on the fuel has caused prices to surge by as much as 50 per cent and slashed margins for its sale in the black market in Thailand.

Until the subsidy was dropped three days ago diesel in Malaysia retailed at 2.15 ringgit (US$0.46) per litre, the second cheapest in Southeast Asia after Brunei.

With domestic prices cheaper by 2.12 ringgit (US$0.45) on average compared with pump prices in Thailand previously, diesel has been smuggled northward across the border for years.

Since the subsidy scheme was adjusted, diesel was selling at 3.35 ringgit (US$0.71) a litre, Kuala Lumpur-based diesel smuggler Hisyam told This Week in Asia, saying the measure has dented his profits.

“It’s not worth the trouble, there’s no more money to be made,” said Hisyam, who declined to reveal his full name.

Operating around the eastern Kuala Lumpur area of Gombak, Hisyam said his role in the erstwhile lucrative business was to drive a modified box lorry and pump diesel into tanks hidden in it before offloading the fuel at a collection point.