(Bloomberg) — As people start to cross from Singapore into Malaysia and back again, an old issue is raising the ire of Malaysian authorities: Singaporean motorists sneaking out purchases of the country’s cheaper, subsidized gasoline.
Officials in Malaysia have pledged more vigilance and tougher action against retail fuel operators caught selling subsidized gas to foreign-registered vehicles, according to local news reports. Thousands of vehicles have crossed the border between Singapore and Malaysia since it was fully opened at the start of the month, ending a two-year, pandemic-forced closure.
The Johor division of Malaysia’s Ministry of Domestic Trade and Consumer Affairs said it will step up enforcement against operators caught selling the fuel to foreign-registered cars, with companies liable for fines of up to 2 million ringgit ($474,400). Former Prime Minister Najib Razak also highlighted the issue in a Facebook post, calling for increased monitoring of such sales.
Malaysia previously banned the sale of 95-RON gasoline to cars not registered locally because that grade of petrol is subsidized for residents. Singapore currently sells that oil grade at more than four times what it costs in Malaysia. Consumers’ desire for cheaper petrol comes as global oil prices surge. Singapore earlier made it mandatory for all locally-registered vehicles to have at least three-quarters of their fuel tanks filled before driving out of the country.
Read more: Costly Gasoline Spurs Tax Cuts That May Delay Demand Destruction
“It’s pure price arbitrage that happens to be illegal of course,” said Wellian Wiranto, an economist at Oversea-Chinese Banking Corp. “The Malaysian government already has the legal framework in place to target such malfeasance, so it’s probably a matter of a tougher crackdown within that framework.”
(Updates with Singapore’s 3/4 tank rule in fourth paragraph)
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