Bad move, wrong timing
SHAH ALAM: The government’s decision to raise fuel prices could not have come at a worse time: the public transport system is still in a deplorable state.
Although Malaysians should be weaned off subsidies, it should be done gradually and not suddenly which will send ripples across all other sectors.
The government’s move simply shows its lack of foresight and thought.
Calling the government’s action to increase the price of fuel a “bad move”, the Federation of Malaysian Consumers Associations (Fomca) president Datuk N Marimuthu (pix) said:
“Why are they [government] doing it at this juncture? They should only increase fuel prices when they have an efficient public transport system in place.
“The public transport system in the country is in a sorry state, so what is the public supposed to do? It is not like they are able to stop using their cars and use public transport instead.
“The government must increase its investment in public transport across the country,” said Marimuthu.
He asked the government what viable alternative is there for the public to avoid the fuel price increase.
The government sprang a surprise by increasing fuel prices by 20 sen with RON95 going up to RM2.10 a litre and diesel to RM2 a litre, while RON97 will continue to be based on market prices.
The increase came into effect on Sept 3 and is expected to save the government RM1.1 billion this year and RM3.3 billion annually.
According to Minister in the Prime Minister’s Department Datuk Seri Abdul Wahid Omar, the move is expected to increase the country’s inflation rate to 2.3 per cent from the current two per cent.
Pointing out that 90 per cent of Malaysians use RON 95, Marimuthu said the move would only cause ripple effects, with price increases across all sectors.
“What is going to happen now is that the manufacturing, public transport and construction sectors will also increase their prices. Food prices will also rise.
“All these things are not practical now at this point of time as the cost of living is escalating. It shouldn’t have been done now,” said Marimuthu.
He was not against the government removing subsidies, but said it should have been done for non-essential subsidies, instead of fuel.
“Consumers should stop relying on subsidies but there must be some exit strategy in place before doing so.
“The government must educate the public on how markets operate, the goods and services tax [GST], how prices are determined and how trade is affected.
“When people understand, things will be easier for them to accept,” said Marimuthu.
The controversial GST is expected to be introduced in the budget in October, following a statement by Finance Ministry secretary-general Tan Sri Dr Mohd Irwan Serigar Abdullah that the tax is a “must, not an option”.
If it is announced, the tax will take effect in 2015.
The government estimates that a four per cent GST could contribute RM1 billion annually in revenue to the government’s coffers and would reduce dependency on Petronas.