Malaysia announced Wednesday a 40 percent hike in gasoline prices to reduce the government's massive subsidy bill, a move that is expected lift the inflation rate to as much as 5 percent. Prime Minister Abdullah Ahmad Badawi also said that electricity tariffs will rise on a varying scale, depending on usage. The hardest hit will be commercial and industrial users, who will have to pay 26 percent more. It is the first time in two years that electricity and fuel prices have been increased. Abdullah said the pump price of gasoline will rise on Thursday to 2.70 ringgit ($0.87) a liter, or 10.23 ringgit ($3.30) a gallon, from 1.92 ringgit ($0.61) a liter now, to bring it closer to the global market price. “We cannot naturally keep subsidizing at the current rate,” Abdullah told reporters. “We must reduce wastage. If we can change our lifestyles, we will not suffer a terrible situation.” He said the government will give an annual cash rebate of 625 ringgit ($201) to owners of cars with an engine capacity of 2,000 cc or less to offset their burden from the massive hike. Subsidies have kept the price of fuel in Malaysia – a net exporter of oil – among the lowest in Southeast Asia. But the government says it can no longer afford to fund the subsidies, which are expected to cost the treasury more than 45 billion ringgit ($14 billion) this year. Abdullah said diesel prices will rise by 1 ringgit to 2.58 ringgit ($0.80) per liter, a 63 percent increase. Gasoline and diesel prices will now be adjusted monthly, but will always remain 0.30 ringgit ($0.10)lower than the world market price, Abdullah said. The restructuring of fuel and electricity prices will save the government 13.7 billion ringgit ($4.41 __
