Malaysiakini columnist Uncle Sim Kwang Yang has had his article Unhappy days are here again! published.
No prize if you guess that his topic is related to the recent oil price increase announced by the government.
Uncle Sim wrote: “How many millions of Malaysians fell into a paroxysm of dismay and depression - like I did - on June 4 when the prime minister announced a sharp jump in the prices of petrol and diesel?” […]
“The future for the individual, the country, and the whole Asian region even, suddenly looks very bleak.”
Coincidentally, while reading Uncle Sim's article early yesterday morning, I was also chatting with a very popular blogger when she mentioned the same phrase ‘unhappy days’ to me. However both of us agreed that the fuel subsidy has to go.
But almost everyone is feeling despondent about the increased fuel price but even more than that, dreading the eventual and more impactful consequences, namely increased transportation cost*, food, electricity, water, and other essential stuffs including expenditure for the kids schooling, etc.
* even though the government promises 100% subsidization to public transport operators, what about the smaller commercial vehicles used by Ahmad, Ah-Kow and Aru? And I am never confident of any form of fuel subsidization, even for public transport operators because this being Malaysia, I can expect corruption to creep into the system.
Additionally the 'austerity' that the government preaches to us could well have a cruel snowballing effect as businesses may suffer from the invariably reduced consumption, which will threaten their continuing commercial viability.
The only enterprise which will boom, and I say this not as a cruel joke but as an observed reality of Malaysian life, will be the 4-Ekor and gambling businesses. Poverty leads to financial desperation, and desperation leads to fantasized hopes ... and fantasy leads the poor to the 4-Ekor shops (but hopefully not the Ah Longs).
The government’s call for austerity or a ‘change of lifestyle’ (while having a ring of truth) unfortunately lacks the required political credibility to serve as leadership entreatments to hold Fort Austerity, when we witness the blooming ministers and senior civil servants cakap ta’serupa bikin brazenly in our face. Mana ada 'leadership by example'?
As Uncle Sim said: “… the financially frayed nerves of the people will be even more sensitive to news reports of massive government wastage, failed white elephants, and revelations of corruption in high places.”
Generally, Uncle Sim’s article is well written and balanced – he didn’t spare the government nor did he overdo the criticisms.
However Malaysiakini writer Stanley Koh was less forgiving in his We need a more caring, innovative government, giving us chapter and verse on the coming agonies for the lower income brackets – he’s not wrong there either.
Yes, indeed these are truly unhappy days!
Stanley Koh wrote: "After more than 50 years, the Barisan Nasional government has failed to improve its governance and administration, a shame shared by many Malaysians.”
I don’t completely agree with his sweeping description of '50 years’, some of which were good ones and, let's be fair, enjoyed by almost all of us. But he’s right in saying the UMNO-led government wasted precious years in not improving its governance and administration. But how could it when the party sustains itself in power through a system of political patronage, cronyism and all the attendant creativity of 'kebijaksanaan atasan'.
But like my chat-blogger-friend, Stanley Koh is absolutely correct in stating: “… Public confidence towards the current government regime in managing economic chaos is razor-blade thin.”
Thus, while many like my blogger-chat buddy and I do understand the need for the cabinet to remove more of the fuel subsidy, there is no general public confidence that the government has the solutions to address the public hardship that will inevitably follow, or for that matter, the integrity to wisely use the savings (from the subsidy) for the public interest.
In the end, the government removing part of the fuel subsidy had really been a case of 'damn if it does, and damn if it doesn't', because the continuously rising fuel prices represent a no-win dilemma for virtually every government in the world.
Uncle Sim did remarked: "We have not heard from the Pakatan Rakyat what their alternative policy is on this matter of rising fuel prices", and for the reason I just mentioned, because for any political party, it would be a torturous terrible terrifying case of facing either Scylla and Charybdis in making such a tough unpopular but long overdue politico-socio-economic policy.
I am of course putting aside someone's questionable and unsustainable populist promises of lowering the fuel price, in exactly the same manner as I had sneered cynically at his promise of political reforms.
And my decision on the latter has been more than amply justified when we witnessed that his first so-called political 'reform' after the recent general election had been nothing more than to perpetuate the UMNO subversive tactic of encouraging party hopping, apart from regularly boasting about his success in enticing BN politicans to defect to his party - see this Malaysiakini news article.
Would this political manoeuvring be 'deformasi' or 'reformasi' on an already dented democratic process. So, in the face of all these shameless reneging of 'promises' of political reforms, you still want to believe another of his 'promises', that of lowering the fuel price? Besides, would such a populist policy be good economic management for the nation's interest?
But yes, I know none can be so blind as those who refuse to see ... (sigh)!
Anyway, back to the oil price. We learnt that the cabinet had determined the new fuel price at RM2.70 per litre based on the global oil price of US$130 per barrel.
But thanks to the Israeli Deputy Prime Minister Shaul Mofaz who opened his big fat mouth on Friday, Oil surges to new heights after Israel’s war threats on Iran. The per barrel price rocketed to US$139 per barrel. I dread to think what will happen should George Bush obsessively carry out his final in-office rightwing Christian act for Israel by bombing Iran.
I read somewhere that for every one US dollar increase in the per barrel price, the fuel price at the gas station will rise by 1 US cent.
Now, oil market observers expect the per barrel price to rise to US$150 by this coming July. This will be a US$20 increase from the Malaysian government's working price in determining the new fuel price. Roughly, the extra US$20 will increase the price per litre at the pump by an additional 20 US cents (65 sen).
Could this be why the government had hastily abandoned its earlier plan to announce the new price in August, fast forwarding it instead to last Thursday? The 78 sen price rise (planned for August) would have been wiped out by the forecast July oil price.
And does this mean we will face another price hike in July/August, taking the per litre fuel price to around RM3.35?
But wait, there’s more for as the saying goes, "when it rains, it pours" – and I refer to my earlier post Higher fuel price - nasty tasting but necessary medicine where I voiced my warning that “…the Malaysian government will have a torrid time playing catch up in its effort to remove the subsidy completely because the oil price continues to rise.”
I also remarked “…Bear this in mind please, the fuel at RM2.70 per litre is STILL highly subsidized, where the true price per litre is more at RM5.00 ..... that is, RM5.00 for now as we may expect it to rise even further.”
Sorry for more unhappy news, but the prediction on future oil price is horrendous for us. Australian experts reckon that the per barrel price before this year is over may well be US$200. That’s a blooming US$70 jump from the government’s current working price of $130.
That will cost an extra US 70 cents or RM2.29 for each litre at the pump (using US$1 = RM3.27). The true price per litre will thus be [current 5 + 2.30 (rounded)] = RM7.30.
Will the government hold the new fuel price of RM2.70 per litre or will it use the same (proportionate) formula and raise the oil price by the year’s end to RM3.95?
Or will it … and this is truly frightening ... give us the whole unsubsidized caboodle of RM7.30?
Truly Tragically Tsunamic because we didn't do what we should have done long long ago. We can see that procastination is the thief of not only time.
UPDATE @ 15:45:
From the Star Online:
Shahrir Samad as the Domestic Trade and Consumer Affairs Minister is currently in the hot seat - I must say I feel sorry for him. When asked to comment on analyst reports that the oil price will hit US$200 (RM680) per barrel (as kaytee has sadly revealed above), he said: “I hope it doesn’t reach that high but if it does, I hope the price won’t peak for a long period.”
Not much of a comment, isn't it, but then what could he have said!
The Star reporter said that Shahrir fell short of the government giving a firm assurance to the public that the 78 sen per litre petrol increase would remain until the government’s new subsidy scheme expires in March 2009. Instead Shahrir tap danced around by making a non-committal (basically meaningless) comment that any increase in fuel price before then would be ‘impractical’.
He said: “If we raise fuel prices before giving out the new subsidies promised, people will complain.”
But what if the government implements the alternative subsidies quickly?
Then he admitted: “I can assure you that whatever rebates and road tax reductions we have announced, we will follow through but I cannot give you a ‘yes’ or ‘no’ answer as to whether there will be any more price increases in the coming months.”
For the time being, we may assume that he means ‘yes’ to further fuel price increase(s) ..… at least until the government gives a firm commitment or assurance.
But I have already expressed my fears in the main post.