A diesel fuel shortage has crippled Malaysia's transport sector after a plan to rein in diesel smugglers backfired, a top industry official said today.

"The fuel shortage has severly affected the air industry which requires the urgent movement of cargo throughout the country," Walter Culas, chairman of the Airfreight Forwarders Association of Malaysia told AFP.

"This in turn is affecting the manufacturing industry which is the engine of growth."

School and commercial buses, trucks, taxis and even fishing vessel operators are also finding it difficult to get enough for their daily needs after quotas were introduced for petrol stations, local media reported.

The government has ordered the oil companies to begin distributing June's quotas and Deputy Prime Minister Najib Abdul Razak has called a special meeting on Thursday to discuss the crisis, which has seen long queues of lorries hunting for pumps which have not yet run dry.

Diesel in Malaysia is heavily subsidised at 88 sen a litre, tempting smugglers to sell it in neighbouring Thailand where it is more expensive, or pass it onto industrial users not entitled to the subsidy.

Protest planned

Pan Malaysian Lorry Owners' Association President Er Sui See said members were planning to go off the road to protest the diesel shortage.

"In the past four months, there have been regular interruptions of diesel supply, causing lorry drivers to temporarily cease operations nationwide," he was quoted as saying by the Star newspaper.

Er said the crisis had forced about 30 percent of their 10,000 members, owning some 100,000 lorries and trailers, to temporarily halt operations as drivers refused to turn up for work.

Culas said the diesel shortage was serious in major states including Penang, Perak, Malacca, Johor and Sarawak.

"The situation is bad. It is beyond our tolerance level. The shortage has been going on for the past two-and-half-months and two days ago it crippled truck movements at the Kuala Lumpur International Airport (KLIA)," he said.

Freight forwarders stuck

Culas said the quota system introduced by the government to fight diesel smugglers had not been properly thought out, adding that the transport industry was not consulted on the plan.

For instance, freight forwarders needed about 500,000 litres of diesel a month to run their fleet of lorries and trucks at the KLIA cargo centre but they were only given 350,000 litres, he said.

Culas urged the government to immediately abandon its unilateral move to impose quotas.

"Hunt down the smugglers but do not hold the country to ransom in order to fight smugglers," he said, adding that he had never experienced such a crisis in his 33 years in the transport industry.

"We are in the dark not knowing what the government's plans to do. It is having a negative image on the country. The quota is a badly planned strategy. It has caught the industry by suprise."