KUALA LUMPUR, Oct 2— Putrajaya could have delayed its 20 sen increase to RON95 and diesel prices today as global oil prices were at their lowest in three years, the Institut Rakyat think tank pointed out today.
Its director, Yin Shao Loong, added that the federal government’s decision to cut fuel subsidies despite falling oil prices reflected a misguided approach towards economic policy and development.
“World oil prices are at a three-year low and have been on a downtrend since July, public transportation has been neglected in favour of private vehicle use, and no adequate measures are in place to cushion lower-income households from a rise in prices.
“By raising RON95 prices RM0.20 — nearly 10per cent — to RM2.30 last night consumers can expect across the board inflation. Yet, the downward trend in world oil prices means the government will be enjoying an even lower subsidy bill than it did previously,” Yin said in a statement today.
He added that continuing with subsidy rationalisation when public transportation is still inadequate and wage growth is stagnant meant that consumers will suffer doubly from the “short-sighted” push for private vehicle ownership during the Mahathir administration.
The latter left Malaysians stuck with expensive cars bought using “burdensome” loans, giving them little alternative but to take the hit from the fuel price increase and the inflationary effect that will follow, he said.
“Having a viable public transport alternative would have given a boost to the disposable incomes of workers and freed them from one source of debt.
“As it is, were commuters to abandon their private vehicles today and convert wholesale to public transport the latter system would not have the capacity to move them efficiently,” he added.
Yin said that the government’s promise to increase the 1 Malaysia People’s Aid (BR1M) to cushion the impact brought by subsidy cuts to petrol and diesel announced yesterday, would also be “too little and too late” for poor households.
He added that any discussion of “fiscal rationalisation” cannot be made without first addressing the tens of billions in wasted public funds discovered each year by the Auditor-General
Yesterday, the Domestic Trade, Cooperative and Consumerism Ministry announced that the revised retail price of RON95 petrol and diesel is now RM2.30 and RM2.20 per litre, respectively.
Putrajaya is under pressure to reduce its chronic overspending to 3.5 per cent of GDP this year, and has embarked on aggressive cost-cutting measures since last September, including slashing of fuel and sugar subsidies and approving an increase to electricity tariffs.