Malaysia PM in key state to douse fuel hike anger

Tue Jun 10, 2008

KUALA LUMPUR (Reuters) - Malaysia's Prime Minister Abdullah Ahmad Badawi was heading to the politically crucial state of Sarawak on Tuesday to shore up support among political leaders unhappy over a steep rise in fuel prices.

Abdullah's trip to the largest eastern state, a major oil producer, comes a day after he announced a cut in ministers' allowances and holidays abroad to assuage public anger over the fuel hike.

The beleaguered prime minister, who has been trying to fend off a challenge to his leadership since his Barisan Nasional coalition suffered its worst electoral performance in March, has also offered to widen a social safety net for the poor to cushion the impact.

"These measures will not be the last. Many other announcements will be made by the government," he told reporters on Monday night, trying to fend off pressure from his own party as well as the opposition, which has threatened to bring 100,000 people to the city centre next month.

Spiraling crude oil prices have driven up the cost of fuel subsidies to near crippling levels in several countries.

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's government said it had sanctioned a rise in fuel prices, and truckers in South Korea have vowed to stop work over the high cost of diesel.

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

But consumers have been questioning why they have to face a steep rise in prices despite the fact that Malaysia, Asia's largest net oil exporter, earns 250 million ringgit ($76.8 million) a year in revenue for every $1 rise in crude prices.

Leaders of Sarawak, which together with neighbouring Sabah accounts for a third of the lawmakers in parliament, said they will be discussing with Abdullah ways to lessen the impact of prices on the poor and for a fair distribution of government funds.

"I'm not going to fight, I just want fairness," state agency Bernama quoted Sarawak chief minister Tan Sri Abdul Taib Mahmud as saying ahead of Abdullah's trip.

Sarawak and Sabah are the bastion states for Abdullah's ruling coalition, holding firm even in the March election, but analysts say the opposition will be targeting discontented lawmakers in its bid to further weaken the government.

Former deputy prime minister Anwar Ibrahim, who has previously said he had enough lawmakers to topple Abdullah's coalition, has seized on the fuel hike, addressing one of the biggest meetings yet in the capital last weekend to drum up support.

On Tuesday, members of the opposition Islamic party, PAS, plan to submit a protest note to the prime minister's office against the fuel hike ahead of a march to the headquarters of state energy firm Petronas after Friday prayers.