Fuel Price Increase - Blessing or Burden?

Gerakan Youth is annoyed with the fuel price increase, and so are a number of other Malaysians. Naturally fuel price increases will always have a fairly significant fallout effect. The first thing to go up will be the transportation cost which affects public transportation, essential products, electricity, construction costs, etc which, one may be 100% certain, would be passed on to the consumers, where at the bottom of their food chain would be the general public.

Those heavily dependent upon motorised vehicles, like mums taking their kids to school, tuition and sports, will also have to fork out more cash per spending period.

While public and freight transportation will be more costly the government has refused to allow an increase in bus or trucking fares, claiming the operators would only be affected by 2% in its operating cost. This is of course merely shifting the burden, 2% or otherwise, from the government to the bus companies to minimise adverse public reactions.

But leave it to the businessmen to weave around this until the government gives in. For example, a bus company has announced that it’s reducing the frequencies of its schedules, other than those for peak period. While this is a rational economic decision, the public will soon discover how inconvenient their lives would be. That’s when the elbow twisting of bus companies by the government to placate public grievances will also see the bus companies asking for a quid pro quo, namely a ‘little’ increase in fares.

DPM Najib asked people to change their lifestyles, meaning the people have to tighten up their belts – go out less, buy less things, be less wasteful and all the usual motherhood statements.

But this of course applies only to the lower income group, as the well-off will undoubtedly continue with their more fortunate lifestyle. I doubt the executive type will forego their Mercedes, Armani suits and Rolex watches nor their wives or girlfriends their biannual clothing ‘refreshing’ in haute fashionable Hong Kong, Paris or London, nor their regular sojourn to Europe, Rio or the Mauritius. Nor will the middle class change much as they will absorb the additional costs rather than change their lifestyles, Very soon they will forget there was a price increase [except for the perpetual whingers].

Therefore I question the argument that fuel subsidies only benefit the wealthy. It’s actually the other way around.

However, having said that, I support the removal of fuel subsidies just as I reject the argument that just because we’re an oil producing country we needn’t raise our fuel price to cope with global market forces. Quite frankly 30 sen is not as monumental as one would like to make out of it.

Of course it will affect the poor in a number of ways but we need to be honest and accept that in fortunate Malaysia the adverse effect will be minimal. The upside is there will indeed be benefits in the longer run, PROVIDED the PM keeps his word that the savings of RM 4 billion will be wisely invested in improved transport infrastructure - hopefully not just buses, nor what is most feared, bailing out MAS.

I am thinking of light rail or even MRT systems for cities like Penang that have a significant population base to efficiently use the system. We should also look at high speed trains between major cities and towns. Then there are possibilities with improving roads systems to reduce distances and facilitate smoother and thus more efficient [less petrol guzzling] road travels.

Having said that, I worry the public would not benefit fully from such infrastructure development unless the investment is scrupulous and accompanied by good public governance, providing full transparency and accountability of the process, and not in the manner that the Penang Outer Ring Road (PORR) project has been awarded.

KTemoc would like to see such infrastructure investments embrace also the mundane but vital needs of deprived areas too, eg. Pengkalan Pasir in PAS-controlled Kelantan, instead of just pouring the lion’s share into KL or Putrajaya. Long suffering kampong and village residents have to cope for donkey years with essential but unsafe muddy road tracks that become impassable during heavy rain, or life-threatening broken bridges that pose games of Russian roulette for the users.

If the savings from de-subsidizing are wisely used to benefit the common people instead of political cronies, then the fuel price increase may in subsequent years be seen as a blessing in disguise.