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

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.

From there, the diesel would be transferred to a different lorry to make the 400-kilometre journey north to Kelantan. The Malaysian state has a long and porous border with Thailand, which has allowed smugglers to transport and sell the fuel in the Thai black market.

“It is easier to collect diesel this far south [within Malaysia],” Hisyam said. “There are way more petrol stations and not as much enforcement [at the border region].”

Hisyam said he was at the bottom of the food chain of a criminal enterprise worth tens of millions of US dollars annually, involving corrupt officials and smuggling cartels on both sides of the border.

“I make maybe 50 ringgit [US$10] a day collecting the fuel. Not much,” he said.

Bank Islam chief economist Mohd Afzanizam Abdul Rashid said smugglers have little incentive to maintain their operations as the diesel price increase has eliminated their profit margins.

“[Also] not to mention the cost to the smugglers in getting caught by the authorities. That would make them think