KUALA LUMPUR - THE spike in fuel prices could derail the government's aim to wipe out abject poverty or cut the number of poor from 3.6 per cent to 2.8 per cent by 2010, economists say.

Bank Islam Malaysia senior economist Azrul Azwar Ahmad Tajudin said purchasing power had shrunk significantly following the revised fuel subsidies, which saw diesel prices rising by RM1 (42 Singapore cents) and petrol by 78 sen.

'As on previous occasions, higher fuel prices mean increases in prices for everything from food to other necessities, including services,' he said yesterday.

'For the poor, the fuel price hikes are a double whammy.'

To ease the burden on this segment of the population, Mr Azrul Azwar suggested the government allocate part of the RM2 billion saved from the austerity measures to the poor.

Alliance Investment Bank vice-president for institutional sales Shahrul Kamal Ramli said Malaysians should benefit from the riches of government-linked companies (GLCs) in terms of dividends.

'GLCs, which are mostly owned either wholly or partly by the government, such as Petronas and Tenaga (Nasional) should give out cash bonuses to the people,' he said.

'Do you know in Singapore, the government pays bonuses to the people? Last year, every Singaporean received around S$700, or RM1,800.'

He said Kuala Lumpur's cash rebate scheme, in lieu of fuel subsidies, would not benefit all the needy as only those who owned vehicles were eligible.

Professor Zainal Kling, former arts and social sciences dean at Universiti Malaya, said any assistance rendered should centre on three aspects - food, transportation and services such as health.

'Therefore, the government should come up with ways to ensure the target groups receive direct benefits,' he said.

BERNAMA