Singaporeans didn't always come to Malaysia just to buy cheap petrol, so when did it started?

Now that the Singapore-Malaysia borders has reopened, pictures of Singaporean cars refuelling subsidised RON 95 at Malaysian petrol stations have been going viral. This has sparked the interest on when did the trend for Singaporeans to refuel in Malaysia started? 

The weakening Ringgit

According to MotherShip, the trend could be traced all the way back to 1980 when the Malaysian Ringgit and Singapore Dollar started showing slight differences in the forex exchange.

Believe it or not, unlike the current SGD 1 to RM 3.10 exchange, the currency exchange between the Ringgit and the Singapore Dollar was one to one back in 1980. The differences in currencies only started showing in March 1981 when the Ringgit dipped to RM 1.09 vs SGD 1.

Also read: Government on the hunt for Singaporean car seen refuelling RON 95

A month later, the currency stood at RM 1.108 to SGD 1 and that number just continued to rise. By 1988, the exchange between the Ringgit and Dollar stood at RM 1.34 to SGD 1.

While the differences were still relatively small, it is only human nature to always opt for the money-saving option. So, it’s not a surprise that Singaporeans were coming to Malaysia just for “shopping trips”.

The price of petrol in Singapore vs Malaysia

According to newspaper clippings of 1983, the price of premium petrol in Singapore would set one back SGD 1.256 per litre then whilst in Malaysia, a litre of the same petrol would cost SGD 1.05 (~RM 1.17).

The MotherShip calculated that the price of 40 litres of petrol would save one at least SGD 8, about RM 8.864 based on RM 1.108 vs SGD 1 conversion.

While that amount might seem negligible still, the respective governments started worrying that this might cause some business-minded individuals to get creative.

And it’s a valid worry, by 1985, premium petrol in Singapore went up to SGD 1.51 per litre while Malaysia remained SGD 1.06 (around RM 1.18). That meant Singaporeans could save SGD 18 (about RM 20) for a 40-litre tank of petrol.

Mind you, RM 20 was a large amount in the ‘80s unlike now when RM 20 can barely get you a box of three-piece Ayam Goreng McD set after tax.

It doesn’t help that Singapore also increased the tax for petrol in Singapore which just contributed to more Singaporeans making a day trip to Johor to fuel up.

In March 1985, the immigration department recorded 29,000 cars that crossed the causeway, nearly 10,000 more than the same period the year before.

However, cheap fuel is not the reason for Singaporeans making the extra jaunt to Johor for fuel, MotherShip quoted a Straits Time (ST) interview at a Johor pump saying “It isn’t the price of the petrol. It is because of the exchange rate.”

In 1985, petrol dealers in Singapore estimated their losses to Johor petrol stations at around SGD 3 million in just one month.

This was when the Singapore government started looking into measures that would discourage vehicle owners from going over to Johor to refuel.

Law enforcement takes action

It was 1989 when the parliament finally took action and passed the bill requiring motorists crossing the causeway to have at least half a tank of fuel in their car.

The MotherShip claims that the logic behind the new law is simply that less tank space means less space for Singaporeans to fuel up in Johor.

Motorists face a fine of SGD 500 under the new law, while those who tamper with their petrol gauge would face a fine of SGD 5,000.

While the measure was considered satisfactory, it still wasn’t enough to reduce the losses Singaporean petrol dealers face.

Remember the quote by ST? It wasn’t the cheap fuel prices that is the lure, but the cheap currency exchange that sent Singaporeans all the way up to Johor to refuel. And it’s not a wonder at all since the currency exchange in 1989 was SGD 1 to RM 1.39.

This was when the government decided to raise the half-tank limit to three-quarters. By 1991, the new law came into effect and has been in place for 31 years.

So, now you know that the trend of Singaporeans crossing the causeway just to refuel. At the time of writing, the Malaysia fuel prices are selling at RM 3.81 for RON 97 while RON 95 has hit its ceiling price of RM 2.05.

In Singapore, fuel prices for 98-octane average around SGD 3.47 per litre (~RM 10.80) while 95-octane average around SGD 3 per litre (~RM 9.30). With such a difference in fuel prices, it’s not a wonder why Singaporeans still make the trip over the causeway for fuel.

Also read: 30 Singaporean vehicles prevented from entering Malaysia for having less than 3 quarter worth of fuel in tank