Wednesday, September 4, 2013

Eyeing the RON 95 and Diesel TWENTY CENTS price hike by Roy Goh

FUEL HIKE: People must look at the long-term benefits in subsidy cuts

MALAYSIANS lined up to save money on Monday night and burnt some as they waited.
The prices of RON95 and diesel were raised by 20 sen to RM2.10 and RM2 yesterday.
This triggered nationwide panic-buying and Kota Kinabalu was no exception with vehicles queuing from late noon.
To make things worse, pump attendants and station supervisors bore the brunt of the people's frustrations at the slightest delay or mistake.
In other states, there were also reports of motorists crashing into pumps, vandalism and other form of abuses -- because of the 20 sen hike. It was good to note those who fuelled before the midnight deadline earned a reprieve worth RM6 to RM20 until their tank empties.
The smallest of cars could hold up to 30 litres and multiply that by 20 sen, its owner saved RM6. For owners of bigger vehicles that could hold up to 100 litres, they saved up to RM20.
A hike in the price of an essential item, such as fuel, is always worth a debate among economists right to the man on the streets.
There are points to be raised both from the decision-makers and end-users. But for the trouble they go through waiting for up to an hour, the rage burning as they scrolled their smartphones on social media, the honking and the beverages they bought, it's priceless, at least to those who queued.
Their grouses varied from the announcement being too sudden, it was wrong, 1Malaysia People's Aid (BR1M) to be blamed and some emphatic tunggulah kamu (just you wait) to the government.
A friend, who smokes a cigarette brand that retails at RM10.50 a packet, said he queued to fill up to make sure he saved as much as he could.
Asked if he would change to a cheaper brand of cigarette so that he could save, his answer was no.
Three key facts that were not stated by those who vented their feelings:
THE contraction could save the government RM1.1 billion for the remainder of the year and RM3.3 billion annually;
THE prices of RON95 and diesel at the stations were still subsidised at 60 sen and 80 sen per litre; and,
COMPARED with prices in the region, where in most countries, it is higher.
The hike would likely hit the lower-income group, according to Federation of Malaysian Consumers Association president Datuk N. Marimuthu.
"The 20 sen increment is high as RON95 petrol and diesel are widely used by the low- and middle-income families.
"Even though it gives the government much-needed elbow room to plan and allocate a bigger budget for other developments, they should also think about the people."
The keyword when Prime Minister Datuk Seri Najib Razak made the announcement was rationalisation.
The move was part of the government's subsidy rationalisation initiative to ensure a more efficient and just distribution of benefits derived from its subsidy effort, he said.
"Currently, our subsidy system benefits everyone, including the higher-income group and foreigners. Thus, we need to move to a more targeted subsidy system that caters to the vulnerable groups.
"The subsidy rationalisation will be carried out in many stages. To reduce the burden of the low-income and vulnerable group following the fuel subsidy rationalisation, BR1M will be increased in the 2014 Budget," he said.
The government, in its 2013 Budget, allocated RM24.8 billion for fuel subsidy and the price move would help save RM1.1 billion in the remaining part of the year. Whatever is saved would be ploughed back to benefit the people, especially the lower-income group.
All this, however, calls for prudent spending among the public and efficiency from the civil service, especially in the transport industry. It also points to the stricter enforcement of laws against profiteers, who will jump on the issue as an excuse to hike prices of goods and services.

Read more: Government saves RM1.1b for rakyat this year - Columnist - New Straits Times

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