• Print
Details
Category: Oil & Gas
Yong: Fuel price hike may result in serious political fallout
By The Star
June 6, 2008


KOTA KINABALU: The rise in fuel prices may result in a serious political fallout for the Barisan Nasional government, a Sabah component leader warned yesterday.

Sabah Progressive Party (SAPP) president Datuk Yong Teck Lee wondered whether the overall consequences of the fuel subsidy cuts had been carefully considered.

He said the immediate reaction to the price increase among Sabahans was that of despair.

“If a government loses the goodwill of the people, then it will find them even more difficult to govern,??? Yong, a former chief minister, told reporters here.

He said political parties, elected representatives and civil servants were likely to feel more pressure from the people to “do something??? to ease their economic woes.

He said the fuel price increase had come almost immediately after people were finding they had to pay more for some types of rice, adding that those most affected were the low- and middle-income earners.

“For those who have just been earning enough to make ends meet every month, the fuel price increase will be a serious blow as they will have to pay more at the petrol pump and when they buy groceries,??? Yong said.

He said even middle-income earners with salaries of between RM4,000 and RM5,000 would be reeling from the effects of the price hike.

Yong also doubted the impact of the RM625 rebate for vehicle owners and RM125 for motorcyclists as there was a time lapse between when money was spent on the fuel and when they would receive their rebate.

He said many people continued to question why Malaysia, as a net petroleum exporting nation, was experiencing a negative impact from a spike in global oil prices.

“The man in the street is puzzled as to why ordinary folks are losing out when Petronas is making so much money,??? he added.

Write comment (0 Comments)

  • Print
Details
Category: Oil & Gas
By Puvaneswary Devindran , The Borneo Post
Friday, June 6th, 2008
 

KUCHING: Unions in Malaysia have no choice but demand for a salary increase of at least 50 per cent, said the Malaysian Trades Union Congress (MTUC) Sarawak Division yesterday.

It said in a press statement that the fuel increase would surely lead to another round of price increase on anything and everything from taxi fares to bus fares, from cooking oil to a packet of nasi lemak.

“Our experience points to the fact that in Malaysia, price increases in commodities and basic items always benefited businesses, not ordinary workers. A classic example is when the price of sugar increased by 10 sen a kilo, a cup of kopi also increased by 10 sen - as if you need a kilo of sugar to make a cup of kopi,??? said MTUC Sarawak secretary Andrew Lo.

As a result, ordinary Malaysians simply cannot afford to pay the market price for petrol, he said.

He claimed that already the prices of cars and toll (due to one-sided deals signed with toll concessionaires) were among the highest in the world, while public transport remained hopeless in cities and non-existent in rural areas.

“People have no choice but to own cars. Many owners have to take a one-year loan just to pay off a basic car, with their car value less than the outstanding loan. This is a result of economic mismanagement that has marginalised the poor, created billionaires and income disparity that is the second highest in Asia, behind only Papua New Guinea,??? he said.

Lo, who is also the CEO of Sarawak Bank Employees Union, said contrary to government claims, petrol was actually cheaper in Singapore, Japan or even the US after taking into account one of the fundamental principles when comparing prices across different countries - purchasing power parity.

He said simply put, Singaporeans still pay much less for their petrol because Singaporean workers earn Singapore dollars and not Malaysian ringgit.

He said even in absolute terms, for example, a typical clerical employee in Singapore earns S$1,200 per month compared to RM900 in Malaysia and RM600 in Sarawak plus Singaporeans only pay about S$2 per litre.

“Per capital income of Singapore is RM100,000. Malaysia is only RM20,000. Singapore does not produce a drop of its own crude oil,??? he added.

He said even in Japan and the US, one would find petrol prices relatively cheaper and that minimum wage in the US was about US$4 per hour and a high school teacher makes at least US$40,000.

He said petrol price in the US was only about US$1.20 per litre. He questioned why the production cost plus distribution cost plus profit amounts to 20 per cent of the pump price.

He said MTUC called on the government to give a full transparent and detailed disclosure of the fuel subsidy as well as the profits of Petronas, independent power producers and other oil companies, oil palm and timber companies every year.

He claimed that the government had ‘forced’ the public to own cars by mismanaging the public transport sector, inflicted a high price on cars, burdened motorists with extensive toll roads, suppressed wages and now wanted to be paid market price on petrol.
Write comment (0 Comments)

  • Print
Details
Category: Oil & Gas

Foreign car fuel ban off
By The Star
Thursday June 5, 2008


PUTRAJAYA: The ban on foreign-registered cars to buy petrol and diesel at border states has been lifted following the fuel price increase.

Domestic Trade and Consumer Affairs Minister Datuk Shahrir Abdul Samad said it was no longer necessary to bar foreign vehicles from going to the petrol stations as the price of fuel now was close to that of the market.

Effective today, consumers have to pay RM2.70 per litre for petrol and RM2.58 per litre for diesel.

 

No more: An employee at a petrol station in Selayang gesturing to show that there was no more petrol yesterday while at a petrol station in Seri Kembangan a sign was put up about 10.30pm Wednesday with the same message.


“With the decision announced by Prime Minister Datuk Seri Abdullah Ahmad Badawi to increase fuel prices, those filling up the tanks of foreign-registered cars are no longer enjoying subsidies accorded by the Government to Malaysians.

“What they will be getting are only discounts so there is no longer a need to impose a ban,??? Shahrir said yesterday.

He had earlier said that petrol stations in states like Johor, Perlis and Kelantan were barred from selling petrol and diesel to foreign cars, in a move aimed at plugging loopholes in the current subsidy system.

The ban was supposed to have involved between 200 and 300 petrol stations in Kedah, Kelantan, Perlis, Perak, and the Johor Baru and Kulai areas in Johor.

Currently, petrol stations are not allowed to sell more than 20 litres of petrol to foreign vehicles.

Under the ban, owners of foreign-registered cars were only allowed to visit petrol stations located 50km from the border.

“Since the price of fuel has risen and the Government has restructured the subsidy system, the ban is no longer necessary. This is because only Malaysians can enjoy rebates, which they will get when renewing their road tax.

“There is no question about foreign-registered cars enjoying the subsidy anymore. The ban has been lifted,??? Shahrir said.

He added the cash rebate for motorists took effect on April 1 and those who had already paid their road tax between then and now would still be eligible.

Write comment (0 Comments)

  • Print
Details
Category: Oil & Gas

Subsidy cut turns up Umno heat on Abdullah
By The Malaysian Insider
June 6, 2008


KUALA LUMPUR, June 6 — The battle lines for the top prize in Umno were drawn during the ruling party’s two-day retreat. Most supreme council members including Datuk Seri Najib Tun Razak supported Datuk Seri Abdullah Ahmad Badawi’s plan to contest the elections in December and hand over power not long after that. But Tan Sri Muhyiddin Yassin and Datuk Seri Rais Yatim felt otherwise. They wanted Abdullah to step down before December, setting the stage for them to quit the Cabinet and emerge as challengers for the president’s and deputy president’s posts.

While Abdullah may take some comfort from the support he received from his deputy and the majority of supreme council members, this will not spell the end of moves to push him out early or set a succession timetable with a definite hand over date.

The Malaysian Insider has learnt that Najib pointed out that there should not be any pressure or time frame set on Abdullah. He added that party president should be given space to think matters through thoroughly before discussing the succession plan with him.

Still, the general view among council members was that the handover of power should take place not too long after the party elections. This scuttles Abdullah’s hopes of staying on until 2010. Besides the succession plan, a raft of other issues was discussed by supreme council members. This included the need for Umno politicians to win over Chinese and Indian voters and the recent 40 per cent hike in petrol prices.

During the retreat, a few ministers disagreed with the decision to reduce subsidies and allow the pump price of petrol to increase to RM2.70 per litre. In this group were Muhyiddin and Rais. The Malaysian Insider understands that the Foreign Minister was also among a clutch of ministers who during the weekly Cabinet meeting on Wednesday felt that the government should hold off reducing the subsidies for a few months.

But the majority of ministers during the Cabinet meeting including Najib and Muhyiddin felt that the government could not afford to continue with high levels of subsidy for much longer. Since the 40 per cent petrol price hike was implemented on Thursday, there has been an adverse reaction on the ground, including from Umno members.

Stinging SMSes have been sent from the grassroots to politicians in the capital, questioning the fitness of Abdullah and the Cabinet to continue running the country and pleading with the leadership to show empathy.

This strong reaction from the Umno ground may have prompted Muhyiddin to have second thoughts about the timing of the price increase. With the branch elections only weeks away and anger against the hike percolating across the country, Umno politicians seeking higher office in the party will have to distance themselves from this unpopular decision of reducing subsidies.

There is a good chance of many more Umno ministers slamming the price hike before the branches start meeting in mid-July.

Subsidy cut turns up Umno...

Write comment (0 Comments)

  • Print
Details
Category: Oil & Gas
Short-term pain, long-term gain: Economists
By The Borneo Post, quoting BERNAMA
June 5, 2008


KUALA LUMPUR: Economists have described the government’s decision to increase fuel prices as good for the nation’s economy in the long-term.

“It’s a short-term pain, but a long-term gain, in terms of better economic stability and reducing the imbalances,??? said RAM Consultancy Services’ chief economist Dr Yeah Kim Leng.

He said the increase was basically to ease Malaysia’s fiscal position so that in the longer term, it would be more efficient and better prepared to cope with rising prices.

“No doubt the 40 per cent increase is the biggest jump in the history, it’s significant and sizeable, but if it is properly channelled for development projects and for the improvement of public transportation, the public will be able to support it,??? he said when contacted.

Prime Minister Datuk Seri Abdullah Ahmad Badawi announced yesterday that petrol and diesel prices will go up by 78 sen and RM1 per litre respectively at midnight.

The new price for petrol at the pump would be RM2.70 per litre and diesel, RM2.58 per litre.

Dr Yeah said the government had no choice but to allow the price to increase as it had been holding back such a move or adjustment since one and a half years ago, despite the higher fuel prices.

“It has resulted in the budget deficit to go to an unsustainable level. So today, you see a 40 per cent adjustment, which is significant but it still comes with some form of subsidy,??? he said.

He said the government’s immediate challenge would be to handle public reaction to such a sharp rise in fuel prices.

“For the middle and higher income groups, the increase will not be significant and will only slightly dampen their demand. They can afford it but with a reduced in saving, which means, real income will be lowered.

“For the lower income group, the government’s proposal for the rebate was a relief as it would help them cope with the increase. They will be a reduction in spending too and definitely there will be impact on the consumption,??? he added.

He expects the increase in food prices would be moderate.

Meanwhile, economist Prof Dr Mansor Jusoh said the cash rebates to Malaysians who owned private cars or motorcycles would benefit the middle and lower income groups.

Under the cash rebate scheme, a total of RM625 per year will be given to owners of private cars of engine capacity of up to 2,000 cc and pick-up trucks and jeeps of up to 2,500 cc.

Owners of private motorcycles of engine capacity of up to 250 cc will be paid a cash rebate of RM150 per year.

Prof Mansor, however, said that the benefit of the cash rebates would not be felt by the poor who had no vehicles but had to face the increase in the price of essential items following the fuel price increase.

He suggested that the government put in place a special mechanism to help the poor.

Prof Mansor said the government’s decision to maintain the price of liquefied natural gas and natural gas at RM1.75 per kg and 63.5 sen per litre respectively, would benefit the power-generation industry.

“So, the electricity tariffs should not increase and Tenaga Nasional Bhd should be able to absorb the fuel price increase in the global market,??? he said.

The increase would however impact the public transportation in major cities and towns, he added.

“People will now think twice before buying a car because of the costlier fuel,??? he said.

In this context, he said, the government should give attention to improving public transportation, especially the commuter services which often the subject of complaints among the public. — Bernama

Write comment (0 Comments)

More Articles...

  1. NST Editorial: Slashing subsidies
  2. Idris: There’s no global fuel shortage
  3. Differing views on price policies
  4. Economists see inflation soaring to six per cent