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Malaysia Ministers Take Pay Cut to Save Costs

Malaysian Prime Minister Abdullah Ahmad Badawi, trying to assuage public anger over a steep hike in fuel prices, said on Monday government ministers would take a 10 percent cut in allowances.

Abdullah also said that ministers' overseas holidays would be reduced and mega projects delayed to save costs.

Visiting Kazakhstan President Nursultan Nazarbayev, right, and Malaysian Prime Minister Abdullah Ahmad Badawi pose outside the latter's office in Putrajaya, outside Kuala Lumpur, Malaysia, Monday, June 26, 2006. Nazarbayev arrived in Malaysia Sunday for a three-day visit. (AP Photo/Bazuki Muhammad, Pool)
Bazuki Muhammad
Visiting Kazakhstan President Nursultan Nazarbayev, right, and Malaysian Prime Minister Abdullah Ahmad Badawi pose outside the latter's office in Putrajaya, outside Kuala Lumpur, Malaysia, Monday, June 26, 2006. Nazarbayev arrived in Malaysia Sunday for a three-day visit. (AP Photo/Bazuki Muhammad, Pool)

Together the measures will result in a saving of 2 billion ringgit, ($613 million), he told reporters after a meeting on ways to cushion the impact of high fuel prices.

"The government also feels the people's pain and the top leadership should lead by example in facing this challenge. As such, the entertainment allowance for the prime minister, deputy prime minister and ministers and deputy ministers will be reduced by 10 percent," he said.

Spiralling crude oil prices have driven up the cost of some states' fuel subsidies to near crippling levels.

Malaysia followed India, Indonesia, Taiwan and Sri Lanka last week, raising pump prices and provoking 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 vowed to stop work over the high cost of diesel.

Abdullah said the decision to increase the price of fuel was a difficult one, but there had been no choice.

Petrol prices were increased by 41 percent and diesel 63 percent 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.

"In all honesty, it was a difficult and agonising decision to make. Many times, we have been tempted to walk away from such a difficult decision," Abdullah told an energy conference.

Fight for Survival

Since May, Abdullah has been fighting for his political survival after his coalition endured its worst performance at the ballot box in 50 years of rule.

The fuel hike has further soured the mood in the country, and the opposition has been trying to seize on the popular discontent.

Abdullah's political future remained at risk and the new measures did not add up to much, political analysts said.

"The measures are too little. It's just cosmetic, it cannot dampen the anger of the people," said political analyst Yahya Ismail.

Cutting ministers' allowances won't save a great deal of money in any case because, unlike their counterparts in countries such as Singapore, they don't earn a lot, said Khoo Kay Peng, another political analyst.

"There are more critical things that the government should look into, such as cutting down and streamlining the public sector," he said.

Malaysia's main stock index was down 1.37 percent on Monday in step with stocks across Asia, and the ringgit fell about a quarter of a percent, again tracking currencies in the region as investors fretted about record high oil prices.

State media reported last week that the government also planned measures such as widening the social safety net for the poor, increasing the number of price-controlled items and improving public transport.

The government says it will save 13.7 billion ringgit ($4.2 billion) as part of a broad overhaul of its heavily subsidised energy pricing system, and days after the hikes were announced there has been some recognition of the government's plight.

"Either we bear the pain now and become more efficient and productive, or let our future generations carry the burden of high national debts and continuing with our wasteful ways," the Edge financial daily said.

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

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