KUALA LUMPUR: The government of Malaysia will ban people in foreign-registered vehicles from buying gasoline in border areas of the country, where heavy subsidies have kept gas prices low, the deputy prime minister said Tuesday.
Najib Razak also said the government was planning other measures to curb the soaring subsidies.
Najib said foreigners should not be allowed to take advantage of the fuel subsidies, which this year are expected to cost the government 45 billion ringgit, or $14 billion, as global oil prices skyrocket.
The ban will take effect Friday at as many as 300 stations within 50 kilometers, or about 30 miles, of Malaysia's borders with Thailand and Singapore. Gasoline over the border can cost twice as much.
Violators could be fined or face up to three years in jail, officials said.
"It's a question of principle," Najib said. "Taxpayers' money is being used to subsidize petrol for those who are not entitled to receive the subsidy."
Foreigners, he said, "should not take advantage of our subsidy scheme."
Najib said an anti-inflationary committee, which he leads, will submit other proposals to the Malaysian cabinet on Friday on ways to tackle the rising subsidies, but he declined to say whether there was any plan to raise retail fuel prices.
The government last raised prices of gasoline, diesel and liquefied petroleum gas in February 2006, when crude oil futures were near a then-record high around $70 a barrel.
Crude oil prices recently breached $133 a barrel, piling new pressure on the Malaysian government's finances as it grapples with an economic slowdown and rising inflation.
Shahrir Abdul Samad, the minister of domestic trade and consumer affairs, said Monday the fuel ban would be "temporary until we come up with better management of our subsidy system."
Currently, foreign-registered vehicles are allowed to buy a limit of 20 liters of gasoline, or 5.3 gallons, Shahrir said.
Alang Zari Ishak, president of a local petroleum dealers' association, said the ban may hurt tourism and relations with Malaysia's neighbors.
"It's a very harsh decision," he said. "There are other ways to curb this subsidy money."
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