Malaysia raised the price of petrol by 6.6 percent and diesel by 18.5 percent from Sunday after it said it was committed to cutting fuel subsidies to free up funds for development projects. The price of a liter of petrol would rise by 10 sen (2.6 US cents) to 1.62 ringgit while diesel would go up by 20 sen to 1.281 ringgit, Prime Minister Abdullah Ahmad Badawi's office said in a statement to the official Bernama news agency.

The increase was part of government efforts to cut the soaring cost of its subsidies amid record high global crude oil prices, it said.

This is the fourth time the Malaysian government has raised petrol and diesel prices since last October but prices still remain low compared with the rest of the region.

Only the oil-rich kingdom of Brunei retains its fuel at prices lower than Malaysia's.

Subsidies for petroleum cost Malaysia 4.8 billion ringgit (1.3 billion dollars) last year. Despite Sunday's price increase, subsidies are expected to reach 6.63 billion this year due to rising oil prices, it said.

The government has said that fuel subsidies will eventually be scrapped to ensure they did not take away much needed funds for the development of schools and rural.

Copyright Agence France-Presse, 2005