Jun 11, 2008

PM says no more fuel price hikes this year

KUALA LUMPUR - Malaysia's Prime Minister Abdullah Ahmad Badawi said Wednesday there would be no more fuel price hikes for the rest of the year.

Abdullah said that because Malaysians were still coping with the impact of last week's 41 percent fuel price increase, the government will absorb the cost of soaring crude oil costs.

"There will be no more fuel price hikes for this year," he said in a statement.

Malaysia, a net oil exporter, heavily subsidises petrol and diesel but said it was forced to implement the deeply unpopular price hike as the cost of subsidies would have ballooned to US$17 billion this year.

The government last week raised the price of fuel by 41 percent to 2.70 ringgit (0.84 dollars) per litre.

To ease the impact on motorists, it will give cash rebates of 625 ringgit for owners of small- and medium-sized vehicles, which will cost the government 5.0 billion ringgit.

Abdullah said the government would also pay salaries of government workers and officers fortnightly from August, to help them organise their expenses and cash flow to cope with the fuel price increase.

Second Finance Minister Nor Mohamed Yakcop warned Wednesday that if world crude oil prices hit 150 dollars in the short-term it could impact on the country's projected 3.1 percent budget deficit.

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