PETROL PRICE HIKE : Critics Fuel Negative Image

THE increase in prices of R0N95 and diesel by 20 sen per litre has infuriated many people, who face rising costs of living. That there will be no change for R0N97 brought little respite. However, many have chosen to look at the hike through distorted lens. The seriousness of the situation is a matter of perception.

Some leaders have chosen to politicise the issue instead of providing an accurate picture of the situation. Before you start pointing fingers and blaming the government, get your facts right. Dispel the myths and remember the facts:

THE country's inflation rate is under control and there are fiscal and monetary policies to control inflation and its effects on the economy;

THE increase in fuel price is because of the Syrian conflict. Twelve years ago, oil was a mere US$15 per barrel compared with the current times, where it could reach US$150 per barrel;

THE Libyan crisis in April 2011 caused a spike in world oil prices, which, in turn, caused a sharp rise in the prices at the pumps;

MALAYSIA is not an official oil-exporting country. About 90 per cent of our oil is used for domestic consumption;

THE reduction of the subsidy, which raised the price to RM2.10, will discourage smugglers from Thailand and Indonesia, who have been profiting from us;

THE government's petrol subsidies are meant for the low-income group;

THE government has allocated RM24.8 billion this year for fuel subsidies. The prime minister has said the country would save RM1.1 billion with the increase of 20 sen for RON 95 and diesel.

In a full year, the government will save RM3.3 billion, while still subsidising 63 sen per litre for RON95 and 80 sen per litre for diesel. The increase of 20 sen will save the government RM3.4 billion (source: Transparency International Malaysia);

PUTRAJAYA has concerns about revenue and faces the likelihood of the country being punished by ratings agencies and foreign investors if no attempt is made to tackle structural problems, such as the high rate of subsidies. Therefore, this reduction is in the right direction;

THE government's target is to reduce the fiscal deficit to three per cent by 2015.

Hence, the increase in fuel price is not political, but rather, about the country's economic status and survival. It is better to tackle economic issues in the country and take steps via fiscal consolidation to increase market confidence once fiscal deficit is reduced;

TO alleviate the burden of rising costs, there will be an increase in 1Malaysia People's Aid (BR1M) next year, to be announced in the 2014 Budget. BRIM 2.0 cost RM2.9 billion early this year;

THE government is considerate in cutting back on subsidies slowly. Indonesia increased petrol price up to 33 per cent in one go three months back;

IF the government did not make this move, the other alternative is to increase taxes;

PETROL prices fluctuate according to the market and when it goes down, petrol prices decrease accordingly. However, this is not the same for goods and services because some traders and business sectors increase prices when the petrol price increases, but seldom decrease prices when fuel price is reduced. This is a cause for more action and monitoring;

EACH of us must be environmentally conscious, take steps to reduce petrol consumption and ensure a better quality of life via a reduction in pollution caused by car emissions. Explore alternatives, such as car-pooling, public transport, walking or cycling;

BETWEEN RM25 billion and RM30 billion is spent on subsidies to allow Malaysians and foreigners to enjoy cheaper fuel, gas and water. Such subsidies are enjoyed by groups which should not be benefiting from cheaper goods and services. While grumbling about the 20 sen increase in fuel price, many have forgotten that even though the pump price has doubled in 15 years, world oil prices have gone up 10 times in the same period;

THE main beneficiaries of subsidised diesel are owners of Vietnamese and Thai fishing vessels. Our fishermen sell their subsidised allocations to them. Reducing the subsidy is a vital move to arrest the leakage from our income; and,

PETRONAS profits are down and the national oil company has warned Putrajaya that it cannot continue subsidising gas for industrial use.

The move to reduce subsidies shows that our prime minister is a realist and ready to forego populist moves for the wellbeing of the nation.

The premier and his team are on the right track.