The Najib administration will continue unpopular subsidy cuts despite surging prices in recent months.
Although a general election is expected within the year, Domestic Trade, Co-operatives and Consumerism Minister Datuk Seri Ismail Sabri Yaakob said the government will commit to slashing a subsidy bill which has risen by RM10 billion for fuel alone.
“We need to reduce our subsidy burden. Show me a country where the prices of goods never rise?” he responded when quizzed on whether the government should delay subsidy cuts due to surging prices.
The consumer price index rose by three per cent in March — the fastest rate in nearly two years — with prices of non-alcoholic foodstuff increasing by 4.7 per cent.
But the government hinted strongly this week that it would raise the prices of basic goods including the base level RON95 petrol.
Prime Minister Datuk Seri Najib Razak said fuel subsidies were “like opium” to the Malaysian economy and would have to be gradually slashed while his deputy Tan Sri Muhyiddin Yassin also said that the government’s subsidy bill was expected to double this year.
Ismail Sabri also said the government would not cancel programmes like the National Service which will cost the Treasury RM560 million this year as “it is necessary for the future of our children.”
“We cannot sacrifice it just to maintain subsidies,” he said.
He also told reporters that the government was currently paying 90 sen for each litre of RON95 petrol and RM1 per litre of diesel bought by motorists at the pump.
This would place the market price of both fuels at RM2.80 per litre, just 10 sen below the higher grade RON 97 petrol.
He also said the rate of inflation was still within government projections of between 2.5 and 3.5 per cent this year.
The government will review all subsidies every six months with the next decision on prices coming at the end of this month.
Analysts and politicians believe that economic woes will be the biggest problem for the ruling Barisan Nasional as the country heads into a general election expected within the year.
According to a Bloomberg report last month, surging fuel prices and unhappiness over the implementation of race-based policies contributed to the ruling coalition losing control of five of 13 states to Pakatan Rakyat in Election 2008, where it also ceded a record 82 out of 222 seats in Parliament.
Najib completed his second year as PM on April 3, after inheriting a contracting economy and a ruling coalition with the smallest majority in Parliament since independence in 1957.
comments
I agree the subsidy program introduces distortions in the economy. But tell us how you are going to deploy the savings. Most likely the subsidy cuts will mean just as large a deficit and the money saved then goes to frivolous projects. Our "Economic Planning Unit" actually plans nothing economic in nature, just how to carve out more to UMNO cronies.
show me a country , where prices go up, plenty of corruption , irregular business deals, dirty politics and still running feudal style system can stay ... arrogant ruling government cannot stay .. like Taiwan , Egypt, Tunisia, Yemen etc .. even Singapore , the lesser evil also see more opposition ..what more UMNO !
.. voters for the opposition will increase in tandem with price increases .. thats for sure !!
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