REFILE-Malaysia to restrict fuel sales to foreigners: report

KUALA LUMPUR (Reuters) - Malaysia will restrict sales of petrol and diesel to foreign motorists from May 31 to prevent abuse of fuel subsidies, news agency Bernama reported late on Monday, in a move that could anger its neighbors.

It quoted Domestic Trade Minister Shahrir Samad as saying that some 200 to 300 filling stations in the Malaysian towns bordering Singapore and Thailand will be barred from selling fuel to non-Malaysian-registered vehicles.

Malaysia, a non-OPEC oil producer, has some of Asia's lowest diesel and petrol prices due to high government subsidies.

It shares land or sea borders with Brunei, Indonesia, Singapore, the Philippines and Thailand.

In the case with Thailand, the ban will apply to petrol stations located within the 30-50 km from the Malaysian border with its northern neighbor, Shahrir said after attending a meeting to combat inflation.

"This move is a stern action by the government to reduce the leak in subsidies that involved high cost and which should actually be enjoyed by the lower-income group in the country," he said.

Malaysia has said its subsidy bill could hit record 50 billion ringgit ($15.52 billion) this year as crude oil prices high record highs. Hundreds of Thai and Singapore motorists cross into Malaysia daily to seek cheaper diesel and petrol.

Shahrir said the ban will be in force until the government introduces a new subsidy scheme to prevent such leakages.

He said petrol kiosk operators who flouted the ban could face a fine of 250,000 ringgit or three years' in jail, or both.

(Reporting by Jalil Hamid, Editing by William Hardy