* Demonstration if no fuel price hike reversal - opposition
* Government given until December to act
* Ultimatum adds pressure on govt and raises tensions
By Razak Ahmad
KUALA LUMPUR, July 28 (Reuters) - Malaysia's opposition and rights groups on Wednesday issued an ultimatum to the government to reverse a recent fuel price hike by December or face a mass street protest.
The demand by PROTES, a coalition of student and human rights groups as well as opposition parties, adds to pressure on the government of Prime Minister Najib Razak, which is trying to shore up its popularity while curbing the budget deficit.
"We will use all available avenues to give the government the opportunity to do the right thing before we go to demonstrations," said Nurul Izzah Anwar, an parliamentarian and daughter of opposition leader Anwar Ibrahim.
The government on July 15 raised prices of the most popular blend of petrol by 2.7 percent and sugar by 15 percent. The move would save the government 750 million ringgit to stem a budget deficit that hit a 20-year high of 7 percent of gross domestic product last year.
The savings were a fraction of the 2.88 billion ringgit ($905.1 million) originally proposed by a government body tasked with subsidy reform and were delayed for months by a government wary of upsetting voters after record poll losses in 2008. [ID:nSGE66E0EL]
PROTES said it would launch an awareness campaign next month and issued the government with five demands that include re-instating the fuel, gas and sugar subsidies as well as introducing a minimum wage. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ ^^ For a related Q+A please click on [ID:nSGE66L0BI]
For a factbox on Malaysia's price rises, click on [ID:nSGE66E0IO]
For a graphic of the country's subsidy bill, click here ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ ^> It said it would give the government until December 15 -- the end of the next parliament session -- to meet its demands or face a major demonstration in the capital.
Hatta Ramli, a top official from the opposition Pan Malaysian Islamic Party, said large companies, including independent power producers (IPPs), continued to enjoy big gas subsidies.
According to government data, the country's IPPs were given 10.39 billion ringgit in 2009 in gas subsidies, with money going to the likes of YTL Power (YTLP.KL), Genting Power (GENT.KL) and Tanjong TJPL.KL, among others.
"They do this without even touching the IPPs, they withdraw the subsidies to the people, this is what we are very much against," said Hatta.
Analysts say the demands are placing additional pressure on Najib, who is trying to consolidate support from the majority Malay votebank ahead of the next general election.
Opinion polls and by-elections have shown ethnic Chinese voters, who account for a quarter of the electorate, have abandoned the government and that majority Malays are split between the government and the opposition.
The next national polls are not due until 2013, but any political backlash from subsidy cuts could emerge in a state election expected by the end of the year in Sarawak on Borneo island, which provides a fifth of the government's 137 MPs.
A poor showing in Sarawak could damage the ruling coalition's ability to stage an electoral comeback.
"This (subsidy) issue represents the best chance for the opposition in trying to shift Malay support from the government," said political analyst Shaharuddin Badaruddin. (Reporting by Razak Ahmad; Editing by Ron Popeski)