Malaysia says no more hikes in fuel prices this year

Petrol prices were increased by 41 percent and diesel 63 percent last week in line with a global surge in oil prices, a measure that would drive inflation to a 10-year high of 4.2 percent in 2008.

Malaysia says no more hikes in fuel prices this year

Malaysian Prime Minister Abdullah Ahmad Badawi, trying to calm public anger over a steep rise in fuel prices, said on Wednesday there will not be more hikes.

Malaysia followed India, Indonesia, Taiwan and Sri Lanka when it raised pump prices last week and provoked a public outcry and protests by opposition groups. On Monday, Nepal became the latest Asian nation to rise prices to stem losses of a state firm.

"The govt feels that the people are still trying to adjust to the high oil price situation," Abdullah said in a statement.

"As such, the cabinet decided that there will be no further increase in petrol and diesel prices this year."

He also said that government servants will be given their salary in two instalments each month to help them manage their finances better.

Malaysia has just over one million civil servants.

Analysts said public anger against the government remained high with many Malaysians questioning why they have to face steep hikes when their country, Asia's largest net oil exporter, earns 250 million ringgit ($76.76 million) a year in revenue for every $1 rise in crude prices.

"Unless he is going to do more, these measures are not enough. The public expects the government to do much more than this," said Wong Chin Huat, a political analyst at the Monash University campus in Malaysia.

Petrol prices were increased by 41 percent and diesel 63 percent last week in line with a global surge in oil prices, a measure that would drive inflation to a 10-year high of 4.2 percent in 2008.

"This doesn't change the uncertain economic outlook," said Vincent Khoo, research head at Aseambankers, referring to Abdullah's statement on no more fuel price hikes.

"What we'll be experiencing in the second half is accelerated inflation, perhaps more so than the Asian region because we're just playing catch up in terms of accepting higher price levels."

Pump prices for petrol in Malaysia are still among the cheapest in Asia.

A protest against the fuel price rise by opposition parties is planned for Friday after Muslim prayers in a build-up to a large one planned for next month when the opposition plans to bring 100,000 people into the city centre.

Reuters

Güncelleme Tarihi: 11 Haziran 2008, 18:23
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