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Malaysia Restricts Fuel Sales to Foreigners

The government will ban people in foreign-registered vehicles from buying gasoline in border areas of Malaysia, where heavy subsidies have kept petroleum costs low despite soaring prices internationally.

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Domestic Trade and Consumer Affairs Minister Shahrir Abdul Samad said a day earlier that the ban was aimed at keeping foreigners from driving into Malaysia from Thailand and Singapore to fill up on cheap gasoline and diesel, which cost up to twice as much in the neighboring countries.

The ban was "a stern act by the government to reduce the leak in subsidy," national news agency Bernama quoted Shahrir as saying. His aide, who declined to be named citing protocol, confirmed his comments Tuesday.

The fuel subsidies, which were expected to cost the government 45 billion ringgit (US$14 billion) this year, "should actually be enjoyed by the lower-income group in the country" and not foreigners, Shahrir said.

"This move is temporary until we come up with better management of our subsidy system," The Star daily quoted him as saying.

Shahrir said the ban could take effect as early as Friday at up to 300 stations within 30 miles (50 kilometers) of the borders with Thailand and Singapore.

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 being utilized."

Enforcement officers will monitor gasoline stations and signs will inform motorists of the new rule, Shahrir said. Those found breaking the rule could be fined or face up to three years in jail, said another official in Shahrir's ministry. He declined to be named, citing protocol.

Currently, foreign registered vehicles are allowed to buy only up to 5.3 gallons (20 liters), he said.

Although oil prices have soared globally, the government of Prime Minister Abdullah Ahmad Badawi has not raised retail gasoline, diesel or gas prices.