Monday, June 23, 2008

Malaysia explains price rises, seeks to avert motion

Malaysia explains price rises, seeks to avert motion

Mon Jun 23, 2008

By Jalil Hamid

KUALA LUMPUR, June 23 (Reuters) - Malaysia called for a motion on Monday to explain a recent spike in prices ranging from food to fuel, in a bid to soothe public anger at rising inflation and avert a no-confidence vote against premier Abdullah Ahmad Badawi.

Introducing the motion in parliament, Domestic Trade Minister Shahrir Samad sought to portray the rise in prices as a matter beyond the government's control. This comes after a small party looked unlikely to succeed in its attempt to call for the no-confidence vote.

"The price increases are beyond the government's control and the government has no resources nor capability to shield the country's economy from the effects of the global phenomenon," Shahrir told parliament.

The ruling Barisan Nasional coalition is seeking to block a possible move by the opposition to turn the motion on price increases into a vote of no-confidence against Abdullah.

Annual inflation hit a 22-month high of 3.8 percent in May and is set to rise further after a recent steep hike in fuel prices, fuelling public frustration in a crisis that could drive the embattled prime minister from office.

The government raised petrol prices by 41 percent this month and diesel prices by 63 percent as part of a broad energy policy aimed at reducing subsidies as global oil prices soar.

The increases come on top of rising food-price inflation, driven largely by record-high commodity prices. The public has widely dismissed as insufficient recent measures by the government to try to soften the impact of the fuel price hikes.

But Shahrir defended the increase in fuel prices, saying that without the rise, the government would have to spend 27 billion ringgit on petrol subsidies in 2008, more than triple the 8.8 billion it forked out in 2007.

"We cannot afford this," he said, without outlining any new measures to cushion the impact of the hike. Debate on the motion is expected to last through the day.

The government hopes to use the motion to explain the price rises to the people but it risks having the opposition turn it into a no-confidence vote against Abdullah after an earlier attempt at such a vote looked almost set to fail.

In an unprecedented move, Sabah Progressive Party (SAPP), a small east Malaysian party in Abdullah's ruling coalition, had planned to call for the vote against the prime minister amid a rift that threatens to split the coalition.

Though SAPP has only two members of parliament, there are worries its move could trigger more dissent within the ruling coalition.

SAPP's motion is unlikely to succeed as it had not given enough notice in parliament.

The party did not submit the motion to the speaker of parliament 14 days before introducing it, as required by parliamentary rules.

Under Malaysian parliamentary rules, a motion not submitted within that time can still be brought up if the speaker deems it to be a specific and urgent matter.

But with the speaker being a Barisan Nasional stalwart, there is little chance of that happening.

The other option is for the opposition to turn the motion on price rises by the government into a no-confidence vote. It needs 112 votes to do so, but it only has 82 seats in the 222-seat lower house of parliament.

Abdullah has been under pressure to hand over leadership to his deputy, Najib Razak, after Barisan suffered its worst electoral setback in 50 years at a March poll, losing its two-thirds parliamentary majority and ceding five states to the opposition.

Public anger against rising prices and a resurgent opposition could compound the pressure for Abdullah to quit.

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