Fuel Hike: Lame Justification and Helpless Poor Malaysian

Many Malaysian might have believed that fuel and electricity tariff increase is inevitable, despite repeat denial by the ministers before the 12^th general election. Nevertheless, the magnitude of the hike is rather very shocking, so do the justifications given. Comparing petrol and diesel price of neighbouring countries make no sense but just rhetoric. Countless opinions from fellow Malaysian already voice out that those neighbouring countries especially Singapore has much higher income per capita. The Star (5 June 2008) reported that petrol and diesel price in Singapore are respectively RM5.20 and RM4.22. Given the exchange rate of about RM2.40 for S$1.00, the mentioned prices in Singapore dollar would be S$2.17 and S$1.76 respective. Neutralizing the exchange rate factor, those prices are much lower than Malaysia’s new petrol and diesel price of RM2.70 per litre and RM2.58 per litre respectively. Our Prime Minister, Abdullah Badawi asked the public to change their lifestyle to ensure no wastage of resources. However, how about the ministers’ and government officers’ lifestyles? Talking about “waste of resources”, how many resources has our government wasted? From the training centre in United Kingdom to the crooked bridge in Johor, who is wasting resources and public money? How about those findings from the General Auditor’s Report?

In the wake of this fuel and electricity tariff hike, inflation is expected; increases in taxi fares, lorry transportation charges, bus fares and food prices reported everywhere in Malaysia within two days of the fuel hike announcement, yet the Domestic Trade and Consumer Affairs claimed that he is confident of no spiral effect during a television interview? Could the government take actions to prevent those increments of charges, fares or prices? In current situation, the threat of organizing strike by lorry, taxi or bus associations very likely will over powered any government’s warning. If inflation is out of control, firstly, the yearly rebates would definitely not be sufficient. Secondly, the poor Malaysians that do not own any vehicle or motorcycle would not even get a single cent from the rebates. Increase in cost of living very likely further burdened the poor Malaysians. Hardship in making a decent living could spiral crimes and domestic problems and even suicides. Literacy rate in Malaysia may drop as children’s education is scarified for meeting urgent daily needs. Of course, all these is the concerns of the poor Malaysian (maybe some middle class too), not the millionaire. Companies’ bottom line very likely to be effected too, but closing off business or reduced profit margin could resulted to layoff, lack of job creation, n salary increment (despite inflation is almost certain), budget trimming on workers’ benefits and increase of selling prices (particularly in markets with inelastic demand). Hence, most (if not all) of the hardships to the powerful capitalists could be passed to the helpless labour group. Is this fair? Could this “subsidies restructuring plan” ensures fairness to all? There could be much more alternatives; with this article joining the bandwagon of suggestions regarding this matter.

Firstly, if fuel subsidies are taxing to the government, I would suggest that the government heavily increase the road tax of private vehicles with high engine capacity (usually luxury cars and luxury motorcycles). Secondly, the government could increase the personal tax of the high income bracket group to increase government revenue. Thirdly, I strongly agree that we should not allow foreigners from neighbouring countries to enjoy our subsidized petrol, thus suggesting to the government to allow higher pricing being imposed to them, not to the Malaysian citizens through differentiated pricing. Of course, new mechanism needed as foreigners could easily put in their credit card and start pumping petrol as like Malaysian at subsidized price. Lastly, Malaysia should adopt an appreciating currency policy instead of maintaining lower exchange rate to safeguard export competitiveness. The nation has been independent for half a century, thus, it is time for Malaysia to compete in term of quality not price. Developed countries hardly compete in pricing but in brand name that build on quality, franchise system that penetrate the global market with ease and continuous innovations to make sure that their products are irreplaceable (try replacing Microsoft programs, IBM or Intel products!). Furthermore, since Malaysia is expected to be a net oil importer in about 10 years time, appreciating currency also help to reduce burden of high oil price (oil price is quoted in US$ at international market). Also, imagine if our currency is S$2.40 for RM1.00, our initial RM1.92 per litre of petrol would cost the Singaporean a hefty S$4.61, hence dispersing their incentive to purposely pump cheap petrol in Malaysia. There could be much more alternative suggestions and opinions, including the government themselves to change lifestyles and not spend unnecessarily, but the current announced “subsidies restructuring plan” by the government certainly not popular and shocking to most Malaysian, particularly to the helpless poor Malaysian.