Malaysian Prime Minister Abdullah Ahmad Badawi, trying to assuage anger over a steep hike in fuel prices, said on Monday the administration will announce new measures to ease the burden on consumers.
Abdullah, already fighting a challenge to his leadership following a poor showing in a general election in March, said the fuel hike decision was a difficult one to make, but there had not been a choice.
Petrol prices were increased by 41 per cent and diesel 63 per cent in line with a global surge in oil prices, a measure that would drive inflation to a 10-year high of 4.2 per cent 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.
He said the administration planned to announce more measures to lessen the pain for ordinary people after a meeting of the National Anti-Inflation Council, which the government set up immediately after the price hike decision last week.
Malaysia's main stock index was down 1.37 per cent on Monday in step with stocks across Asia, and the ringgit fell about a quarter of a per cent, again tracking currencies in the region as investors fretted about record high oil prices.
Analysts said Abdullah's political future remained at risk, but he could contain the political backlash if he carried through the measures aimed at reducing the impact on low-income individuals.
"He will have to deliver his promises. The outcome is obvious, he can be thrown out if he fails," said Khoo Kay Peng, a Kuala Lumpur-based political analyst.
On the other hand, if Abdullah succeeded, "he will be seen as a prime minister who can bring the country, which is accustomed to artificially low production costs due to subsidies, to a new level," Khoo said.
State media reported last week that the government 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; Dh15.46 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.
Hurt now or hurt later
"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.
But consumers grumble about having to face a steep rise in prices despite the fact Malaysia, Asia's largest net oil exporter, earns 250 million ringgit ($76.8 million; Dh282.62 million) a year in revenue for every $1 rise in crude prices.
"Simple logic: As an exporter of fuel, how can fuel price increase hurt us? Why, why?" read a post on a popular blog rockybrublogspot.com among the several where Malaysians have been venting their anger against the government.
On Sunday, opposition figure Anwar Ibrahim seized on the fuel hikes, addressing one of the biggest meetings yet to drum up sentiment against the Barisan Nasional coalition that has ruled Malaysia since independence from Britain in 1957.
"Politically, the message was clear on 8th of March (election day), economically it's now a disaster. That is why we are calling on them to resign," Anwar said.