Kuala Lumpur  - Malaysia plans to enforce a mechanism to make foreign drivers pay the market price for fuel so that only locals are able to enjoy a government subsidy, reports said Monday.

Deputy Prime Minister Najib Razak said the government will implement a dual-pump system at petrol stations in border areas where foreigners and locals pay different prices for gasoline.

"The system has two benefits; foreigners will pay for petrol at the current price and Malaysians will know the actual market price of petrol," he was quoted as saying by the official Bernama news agency.

Earlier this month, Malaysia announced a hefty 41 per cent raise in the price of fuel to 2.70 ringgit (US$0.83) a litre and 63 per cent for diesel.

However, despite the price hike, fuel in Malaysia remains subsidized and cheaper than most neighboring countries. Gasoline now costs 2.70 ringgit a litre, or 3.20 US dollars a gallon, at pumps.

Najib declined to say when the new pump system would be put in place.

Prime Minister Abdullah Ahmad Badawi has said the move to increase the fuel price was to offset the government's big subsidy bill following rising global oil prices.

Following the price hike, protestors have taken to the streets with several demonstrations demanding that the price of fuel be brought down. (dpa)