Petrol (1): The U-turn gostan government

Posted on June 29, 2008


By Helen Ang


Anwar Ibrahim made a populist overture with his promise that petrol prices will be kept under the lid … if he comes to power, that is. The Abdullah Administration seems determined that the carrot Anwar is dangling will be out of our reach.

The government announced the 78-sen increase in petrol per litre on June 4. The PM first said prices at the pump would be adjusted monthly based on the global oil price. At the same time, Abdullah Badawi announced “the restructuring of the subsidy package” – a move that would save the authorities a tidy sum of RM13.7 billion. And the savings are to be diverted … urm, money to be used to succour the poor rakyat.

But also again, the PM for all Malaysians told the public to make changes in their lifestyle to mitigate the financial pinch.

Yet barely a few days prior to the announcement, Najib Razak brushed off speculation that petrol prices would increase by 40 sen (in retrospect, a relatively more welcome quantum). The Star reported on March 31 the deputy PM as saying, “There’s a lot of speculation and talk going around. But none of it holds water. The public should not listen to rumours.”

And on June 3 – the eve of Abdullah’s announcement – Domestic Trade and Consumer Affairs Minister Shahrir Abdul Samad said the full subsidy system couldn’t be decided immediately. The Star reported Shahrir saying the Finance Ministry was still evaluating all proposals and a final decision on the scheme would only emerge in August.

So we have top men in government saying different things within the span of a week, and the right thumb not sure what Morse Code the left fingernails are tapping.

What does the former top man in government think? Petronas advisor Mahathir Mohamed blogged on June 6: “But Petronas made a profit of well over RM70 billion, all of which belong to the government. I feel sure that maintaining the subsidy and gradually decreasing it would not hurt government finances.”

Dr M also displayed his trademark biting sarcasm on the reverse gearing: “A few days ago the government decided to ban sale of petrol to foreign cars. It flipped. Now foreign cars can buy again. Flopped.”

“The increase hurts but the pain is greater not just because of the increase percentage-wise is higher than in developed countries but because of the manner the increase is made,” Che Det posted.

Instead of a gradual decrease in petrol subsidy, the government opted for the big-bang method – a sudden hefty price hike. If the price increase is spread out over time, each rise will give an excuse to other retailers to raise prices too, so there is really some advantage to a one-time sudden spike.

However, the PM did not have this economic rationale in mind when he hit consumers with the 78-sen whopper. After all, he had initially announced on June 4 that prices would be adjusted monthly based on world oil prices.

On June 11 after a sustained national uproar, the PM made a turnaround announcing that there will be no further increase to the price of fuel in the country this year. As Dr M judges correctly, Abdullah flip flops.

In truth, I’ve plenty of beef with Dr M; in fact, enough to hold a kenduri. But the Abdullah Cabinet coming to town on the fuel hikes is a circus that even former ringmaster extraordinaire Mahathir couldn’t have surpassed. Press coverage over the past weeks since the price hike announcement has been a media circus too. Time to fold the tent on both?

NEXT: ‘Petrol (2)’ on the subsidy spin.

Posted in: Free the people