Protests in India, Malaysia on fuel price hikes

 

Consumers react angrily as authorities in both countries slash fuel subsidies, causing gas prices to jump as much as 41% overnight at the pump.

 

KUALA LUMPUR, Malaysia (AP) — Protests broke out in India and Malaysia on Thursday as consumers reacted angrily to sharp fuel price hikes that could undermine governments in both countries.

With global oil prices soaring, authorities in the two countries said a day earlier they were slashing fuel subsidies that were draining government coffers.

In Malaysia, gasoline pump prices jumped 41% overnight and diesel prices surged a stunning 67%.

The gasoline price hike in India, the second this year, was smaller — about 11% in the capital, New Delhi — but will still weigh on consumers. India also raised prices on diesel and cooking gas.

The most pronounced protests were in India’s West Bengal state, where schools and businesses were closed and flights and trains canceled. Shops were also shuttered and roads emptied in the southern state of Kerala, with protests also reported in the central city of Indore.

India’s communist parties, which control both Kerala and West Bengal, have called for a week of protests across the country, saying import duties on oil should be further cut instead of raising retail prices.

In Malaysia, long lines of vehicles formed at gasoline stations overnight to fill up before midnight when the new pricing came into effect, and brawls broke out as some motorists tried to cut in line.

On Thursday, gas stations were mostly deserted. The opposition Democratic Action Party staged a small protest in downtown Kuala Lumpur and vowed more rallies to demand the government back down from the plan.

“There is a sense of public outrage … both on the increase and the manner in which it was done,” said DAP chief Lim Kit Siang.

But many Malaysians appeared resigned to the cut in fuel subsidies.

“If we don’t increase the fuel price now, the economy will go down,” said Chong Wai Ket, a 29-year-old shopkeeper in Kuala Lumpur.

PROTES, an anti-inflation coalition of opposition parties and other groups, is planning rallies nationwide which will peak in a mass demonstration in Kuala Lumpur on July 12, said a coalition leader Hatta Ramli.

“We are hoping for 100,000 people to turn up. We want the government to revert to yesterday’s price,” said Hatta, who is also a member of the opposition Pan-Malaysian Islamic Party.

Like many Asian countries, Malaysia, is struggling with a spiraling fuel subsidy bill that may breach $14 billion this year as global oil prices skyrocket.

India, which imports 75% of the crude oil it needs, has said the hikes will help cover losses at state-run oil companies which have been unable to pass on to consumers the higher fuel costs due to price controls.

Government coffers have been shrinking as crude oil prices doubled over the last year, spiking above $135 a barrel last month before falling back to the $122 range Thursday.

Indonesia, Taiwan and Sri Lanka have also recently raised fuel prices.

In Malaysia — which had some of Southeast Asia’s lowest gasoline prices — gasoline jumped from $0.61 a liter to $0.87 a liter, or $3.31 per gallon.

In India, gasoline was raised 5 rupees per liter. In New Delhi, that lifted the pump prices to $1.20 a liter, or $4.56 a gallon. Fuel prices vary between states, which also impose their own taxes. Singh has urged states to lower taxes to ease the burden for the people.

The fuel price hike is expected to send prices of food, transportation and other essentials higher across the board, piling further inflationary pressure on India and Malaysia. India’s inflation is currently at 8% and Malaysia at 3%.

Protests over the price hikes may further weaken Prime Minister Manmohan Singh’s government ahead of an election in India by the middle of next year, analysts said.

In Malaysia, Prime Minister Abdullah Ahmad Badawi faces increasing risks as he fights for his political survival after shock election losses in March.

“It’s going to be hard for people to accept. There will be an immediate adverse effect on (Abdullah’s) popularity,” said Ibrahim Suffian, director of independent think-tank Merdeka Center of Opinion Research.