Agriculture Minister Muhyiddin Yassin said the sole rice importer Padiberas Nasional (Bernas) will not be allowed to increase the wholesale prices of rice.

'They cannot increase the price of rice as and when they like,' Bernama news agency quoted him as saying.

In future, Bernas must 'negotiate and officially ask the government for a decision and provide proper justification', he added.

Deputy Prime Minister Najib Razak said a price hike would be a burden to the people.

'There will be a widespread effect if there is any increase in the price of the staple food. It will burden the people,' the New Straits Times newspaper quoted him as saying yesterday.

Shares of Bernas fell on the news, closing the day 2.2 per cent lower at RM2.22 (65 Singapore cents).

Bernas had announced last Thursday that it planned to raise the price of rice by between 5 and 20 sen.

It said a price increase at the retail end could not be avoided because rice prices had increased by between 10 per cent and 100 per cent since 2005.

It added that the proposed increase also reflected the rising handling cost and fuel price.

These had resulted in an increase of between 30 per cent and 50 per cent in shipping cost in the first six months of the year, it said.

In his reaction to the announcement by Bernas of its plan to raise rice prices, Datuk Seri Najib said it should not have made the move without consulting the Agriculture Ministry.

This is because a hike in the price of the basic food commodity could trigger an increase in the cost of other food items, he said.

The increasing cost of living is a big concern among Malaysians. The government's popularity took a big hit in February last year after it raised the price of petrol by about 20 per cent.

Malaysians have also complained about inflation after the government raised the salaries of one million civil servants recently, giving businesses ranging from restaurants to supermarkets an excuse to increase the price of their goods.

A general election is not due until 2009 but some analysts expect Prime Minister Abdullah Badawi to call for snap polls by year-end to take advantage of a buoyant economy.

Malaysia imports about 800,000 tonnes of rice a year, mainly from India, Pakistan, Thailand and Vietnam.

Imports make up 65 per cent of Malaysia's total rice consumption.

REUTERS