Malaysian diesel subsidies for Sabah fishermen are being smuggled into the Philippines, driving a black market trade.

Subsidized diesel for Sabah fishermen in Malaysia is being smuggled into the southern Philippines via the Sulu Sea and sold on the black market at nearly double the local price, fueling a lucrative trade. Malaysian authorities seized nearly a million liters of diesel and 90,000 liters of petrol last year, valued at 88 million ringgit ($22 million), much of it destined for illicit sales. The price difference—about 53 cents per liter in Sabah versus 85 cents in the Philippines—drives smuggling, aided by the region’s dense islands, overlapping maritime boundaries, and limited enforcement. While the 2006 fuel subsidy was meant to support fishermen, it has been exploited, with some selling unused fuel. Remote border islands host unregulated storage, complicating monitoring. Despite digital tracking efforts, cross-border coordination remains weak, and experts urge reform to tie fuel distribution to actual fishing activity.