Prayer Alert (1 Thessalonians 5:16-18)

Price Hike

Description: FYI # 77

From the NECF Research, 6 June 2008

PRICE HIKE

As we are feeling the pinch from the rising cost of living, the Prime Minister Datuk Seri Abdullah Badawi’s recent announcement adds salt to the wound. The 40% increase in petrol price from RM1.92 per litre to RM2.70 per litre takes immediate effect. The pain is further compounded by the subsequent announcement of increase in electricity tariffs which will begin in July. The CEO of the Tenaga Nasional Bhd said the move was to reflect the government’s action to reduce fuel subsidies. Earlier, the Domestic Trade and Consumer Affairs Minister Shahrir Samad assured the people that there would be no increase in fuel prices at least until August.

In the midst of struggling with the spiralling food prices, Malaysians now face a rude awakening. The era of subsidy may soon be over. The Second Finance Minister Tan Sri Nor Mohamed Yakcop said the restructuring of subsidies would help create a more efficient economy and would eventually lead to higher growth rate at a sustainable level. However, to the average folks and wage-earners, such burden is too heavy to bear; they feel that they are paying dearly for the government’s incompetency. Meanwhile, the Bank Negara Malaysia is anticipating inflation to hit 10-year high.

Reactions are varied. Some people have taken their fury to the streets. PROTES (Organizers Coalition against Inflation) seeks to mobilize 100,000 people for a mass protest. Many have asked whether the poor are being punished for bad governance, economic mismanagement and policies. Others argue that there are alternative ways to counter the increasing global oil price and to address people’s need. Still others criticise the government for its inefficiency and giving in to corruption. They say that rebate system will only bring in “unnecessary and ineffective bureaucracy” and thus advance corruption. Certain analysts however believe the move to be wise and timely.

Tun Dr Mahathir Mohammad, an advisor to the Petronas, said in an interview that Malaysia “produces 650,000 barrels of crude per day. We consume 400,000 barrels leaving 250,000 barrels to be exported. Our 250,000 barrels of export should earn us RM27 billion… Petronas made a profit of well over RM70 billion, all of which belong to the government.” As such, the government can afford to maintain the fuel subsidy (Malaysiakini.com, Jun 5).   

The opposition leader Dr Wan Azizah Wan Ismail blasted the government for saying the new petrol price as the lowest in the region. She called comparing prices with Singapore, Thailand and Indonesia as flawed, and that a proper comparison should be made with that of the oil-producing countries, e.g. United Arab Emirates (RM1.19/litre), Egypt (RM1.03), Venezuela (RM0.16), etc. She also accused the government for being inconsistent in its facts: the Minister of Domestic Trade and Consumer Affairs said that the subsidy was RM56 billion, Second Finance Minister claimed the amount to be RM28 billion and the government’s 2007 financial report marked it at RM12 billion. Instead of cutting subsidies, heavier tax should be levied on the rich oil-companies, suggested Dr Wan Azizah.

Political analyst Ong Kian Meng nonetheless begged to differ, saying that reducing oil subsidies was “an economically necessary move.” It would allow the government to spend on the areas that could bring long-term benefits such as improving public infrastructure. He also noted two reasons why the public having difficulty accepting the price hike: (a) Malaysians have long been spoiled by the subsidies, and (b) the widespread perception that many politicians benefited from “crony and corrupt deal.”     

In short, the public, the poor in particular, are paying the price for bad policies. People are still reliant on their own vehicles due to perpetually dreadful public transport system.

We continue to pray

·         For the government:

o   Just and good governance, competent and efficient, seeking to prioritise public interests;

o   Wisdom and discernment in making policies that benefit all rakyat, particularly the poor;

o   Cut down unnecessary expenses; prudent in spending taxpayers’ money; wise in managing funds; set good example to live “simple”.

·         For the public: live sensibly; spend wisely; and willing to help one another.

 

May the glory of the Lord, the majesty of our God encouraged the exhausted and strengthen the feeble.



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