By Jalil Hamid and Liau Y-Sing
KUALA LUMPUR (Reuters) - Hundreds of Malaysians began amarch in the capital on Friday, demanding the governmentwithdraw a steep hike in fuel prices or resign, in the biggestprotest yet against Prime Minister Ahmad Abdullah Badawi'scoalition.
"Down with PM, long live the people," the protestersshouted as they left a mosque after prayers in a poor part ofKuala Lumpur and headed to the iconic Petronas Towers in thecity centre to underline anger against the state energy giant.
Hundreds of police in full riot gear stood guard while ahelicopter hovered overheard, reflecting government fears overthe protests' gathering momentum.
Malaysia joined India, Indonesia, Taiwan and Sri Lanka inraising pump prices last week, provoking a public outcry in theoil producing country. Soaring global fuel costs have triggeredstrikes by truckers from Thailand to Spain.
Friday's protest is seen as a major political test forAbdullah, already fighting for his political survival after thegoverning coalition's dismal electoral performance in March.
Police have urged people not to join the rally, deemedillegal because no permit has been issued, and warned theywould arrest protest leaders.
A police officer estimated the number of people involved inthe march at 1,000 but organisers said it was much more.
"We are not sure how many protesters will turn up and whichroutes they will take. But we are taking all precautionarymeasures," a police spokesman earlier told Reuters.
There are tight restrictions on public gatherings inMalaysia, but the opposition said the people wanted to airtheir anger.
"The people are angry. They say the fuel price is very highso they want to say something," said Safarizal Saleh, a leaderof the youth wing of the Islamist opposition party Parti IslamSeMalaysia (PAS).
Petrol prices were raised by 41 percent and diesel 63percent in line with a global surge in oil prices, whichtouched a record $139 a barrel last month. The measure willdrive Malaysia's inflation to a 10-year high of 4.2 percent in2008.
"Chief ministers and ministers' have huge pay packets andthe government pays for their petrol. So they do not understandthe sufferings of the rural folk," Nik Aziz Nik Mat, thespiritual leader of PAS and chief minister of the northeasternstate of Kelantan, told Reuters in an interview.
NO MORE HIKES
The government says it will save 13.7 billion ringgit (2.2billion pounds) as part of a broad overhaul of its heavilysubsided energy pricing system.
Trying to assuage public anger, Prime Minister Abdullah hassaid there will not be any more fuel increases this year andannounced a cut in the allowances of ministers as part ofmeasures to curb government costs.
But critics, led by former Deputy Prime Minister AnwarIbrahim, have rejected the measures as too little andquestioned why Malaysia, the largest net oil exporter in Asia,should face the fuel hike when the country earns 250 millionringgit a year in revenue for every $1 rise in crude prices.
"Although Petronas is estimated to have earned 2 trillionringgit over the last 34 years ... its accounts are notaccessible to (the) public nor by the people's electedrepresentative in Parliament," said Waytha Moorthy, chairman ofHINDRAF, a group campaigning for the rights of ethnic Indianswhich is supporting the fuel protests.
Petronas posted a record profit of $12.9 billion (6.6billion pounds) for the year ended March 31 2007, helped by aboom in crude oil prices. The state oil firm is expected torelease its 2008 earnings at the end of June.
On top of higher fuel costs, the government, like itscounterparts in the region, is also battling the spirallingcost of food by trying to lock in supplies of rice.
Abdullah was due to launch a programme later on Friday inKelantan to step up rice production. Malaysia meets nearly 70percent of its rice demand from domestic production.
(Additional reporting by Niluksi Koswanage; Writing bySanjeev Miglani; Editing by Alex Richardson)
