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Malaysia's leader pledges to ease public burden after massive gasoline price hike

Malaysia's leader pledges to ease public burden after massive gasoline price hike

Malaysia's leader announced plans Monday to trim financial allowances for government ministers and enforce other cost-cutting measures after raising gasoline prices by 41 percent last week.
The unexpectedly sharp hike in fuel prices led to sporadic protests nationwide, with opposition groups calling for a mass demonstration next month to urge the government to reverse its decision.
Prime Minister Abdullah Ahmad Badawi moved to calm public anger Monday by announcing plans to save nearly 2 billion ringgit (US$600 million; euro400 million) through steps such as cutting entertainment allowances for Cabinet ministers by 10 percent from next month.
Authorities will also defer purchases of assets, limit trips for officials and downscale government events, Abdullah told a news conference.
"The government feels the pain of the people and the leadership must show a good example in facing this challenge," he said.
Abdullah said the government is considering the possibility of cutting road toll fees and boosting financial aid for underprivileged groups.
The pump price of gasoline rose Thursday by a whopping 41 percent to 2.70 ringgit (US$0.87) a liter, or 10.23 ringgit (US$3.30) a gallon. Diesel prices shot up 63 percent to 2.58 ringgit (US$0.80) per liter.
The government has defended the cut in fuel subsidies as crucial to ensure the country's long-term economic viability as global oil prices hit record highs and showed no signs of abating.
Abdullah has earlier pledged that the government will speed up cash rebates to car and motorcycle owners, enlarge the list of controlled items to keep costs down and put more buses on the roads to boost public transport.
Like other Asian countries, Malaysia had faced a spiraling fuel subsidy bill that could have been more than 56 billion ringgit (US$17 billion) this year due to rising world oil prices.
Still, despite the increase, Malaysia's gasoline prices remain lower than other Asian nations such as Singapore, Thailand and India.
In addition to the fuel hike, Malaysia also increased electricity tariffs from July by as much as 26 percent for some consumers.
The energy price hike is a politically risky move for Abdullah, who is fighting for his political survival after his ruling coalition's shock election losses in March.
The move is expected to push inflation to a 10-year high of around 5 percent, up from 3 percent now, and slow consumer spending and hurt Malaysia's economic growth.
Abdullah has said the revised energy prices would save the government 13.7 billion ringgit (US$4.4 billion; euro2.9 billion), part of which will be used to help subsidize rising food prices.