UPDATE 1-Malaysia to revise fuel subsidy from Q2 2010

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SINGAPORE, Nov 13 (Reuters) - Malaysia will revise the way it pays fuel subsidies, a heavy drain on its budget, from the end of the second quarter next year, a senior finance ministry official said on Friday.

"We will start doing that towards the end of second quarter of next year," Ahmad Husni Hanadzlah, Malaysia's second finance minister, told reporters in reply to a question on when revised fuel system subsidies would be introduced.

Malaysia's budget deficit has widened in recent years, in part due to fuel subsidies. The deficit is expected to be 7.4 percent of gross domestic product (GDP) this year and 5.6 percent in 2010

Attempts in 2008 to rein in the subsidies resulted in the government that has ruled this Southeast Asian country for 52 years falling to its worst ever losses in national and state elections.

In the 2010 budget, food and fuel subsidies are seen falling 14.7 percent from 2009 to 20.9 billion ringgit out of total government operating spending of 138.3 billion ringgit. [ID:nSP189242]

One way to ensure that fuel subsidies are targeted at the poor would be to use a micro-chipped ID card carried by all Malaysians that could include income data. (Reporting by Nopporn Wong-Anan; Editing by Anshuman Daga)