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Malaysia cuts minister allowances
Austerity measures announced to ease public burden after sharp rise in fuel prices.
Last Modified: 09 Jun 2008 18:38 GMT

Public outrage over the June 5 increase in
fuel prices has led to nationwide protests [AFP]

Malaysia has announced plans to cut financial allowances for government ministers and to enforce other cost-cutting measures after it raised petrol prices by 41 per cent last week.
 
The increase in prices has sparked protests, with opposition groups calling for a mass demonstration next month to urge the government to reverse its decision.
Abdullah Ahmad Badawi, the Malaysian prime minister, moved on Monday to calm public anger by announcing plans to save nearly 2bn ringgit ($600 million) through the austerity measures.
 
They include reduction in entertainment allowances for cabinet ministers by 10 per cent from next month.
Economic viability
 
Authorities will also defer purchases of assets, limit trips for officials and scale down government events, Abdullah said.
 
"The government feels the pain of the people and the leadership must show a good example in facing this challenge," he said.
 
The government has defended the cut in fuel subsidies as crucial to ensure the country's long-term economic viability.
 
The pump price of petrol rose on Thursday by 41 per cent to 2.70 ringgit ($0.87) a litre.
 
Diesel prices shot up 63 per cent to 2.58 ringgit ($0.80) per litre.
 
Despite the recent increases, Malaysia's petrol prices remain lower than other Asian nations such as Singapore, Thailand and India.
 
CEO's support
 
Abdullah's unpopular decision to increase fuel prices received strong support from the chief executive of BP Plc at an oil and gas conference which opened in Kuala Lumpur on Monday.
 
Tony Hayward criticised government use of subsidies to shield consumers from rising oil prices, saying it was unsustainable as it strained public finances and discouraged sensible fuel-efficiency measures.
 
"The taxes that governments take from the oil and gas industry have continued to increase across the world. I believe this is unsustainable and counterproductive. All it means is that we have less money to invest in new production," he said.
 
"Governments must also co-operate to lower trade barriers and tariffs. These are unproductive and run counter to the essential truth that a free and open energy market is just about the best possible guarantee to energy security."
 
Toll fee cuts
 
Besides the cuts in allowances for ministers, Abdullah said his government is considering the possibility of reducing road toll fees and increasing financial aid for underprivileged groups.
 
Abdullah had pledged earlier 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 rising fuel subsidy bill that could have been more than 56 billion ringgit ($17bn) this year due to rising world oil prices.
 
In addition to the fuel price rise, Malaysia also increased electricity tariffs from July by as much as 26 per rcent for some consumers.
Source:
Al Jazeera and agencies
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