17.7.10

and so the fuel price is up again..difference is..

Yesterday reminded me of one of the most significant contributions of Pak Lah's Premiership, when he announced an oil price hike which was beyond what we ever imagined. That was barely 3 months from steering BN into their worst ever election results since '69. Yes, true the intentions were right. Crude oil price were on the up at that time, it was just logic that fuel price had to also appreciate, just like everywhere else in the world. Subsidies had to be gone anyway gradually. But the rakyat were predictably stunned when the 40 to 67% price escalation was announced, as they were enormous, some say astronomical. What used to be a neglected portion of their monthly expenses, has increased two to three-folds. The government received severe backlash due to this move. Their popularity dwindled to its all-time low. Some people pointed to this as the turning point of Pak Lah's tenure during that time.

A number of damage limitation strategies were introduced after the price increase. For example, the government announced a yearly cash rebate of RM625 per year to Malaysian citizens who own cars with an engine capacity of 3,000 cc or less and RM200 tax rebate to cars with an engine capacity of 3,000 cc and above to offset the increased costs. But the scar never healed, and it will take some time before the Rakyat gains confidence in the way subsidies are handled.

The fuel price has somewhat normalized though, remaining stagnant since its last price change in 16 December 2008. On Thursday, the Government announced subsidies for 5 items; the three fossil fuels (RON95, RON 97 and Diesel), LPG and sugar will be reduced, or removed completely. At that time, the fuel price throughout Malaysia read RM1.80 per litre for RON95, RM2.05/l for RON97 and RM1.70/l for diesel, while LPG was RM1.75 per kg and sugar was RM1.65 per kg. Although this move was still considered unpopular amongst the rakyat, what made it different this time though, was that the increase is not as radical as 40 to 67%. The government is calling it an 'effort to rationalize subsidies' and it is aptly named Subsidy Rationalization Programme. Communication to Rakyat has also improved, with the Government trying to detail the reasoning behind the need to eventually move away from subsidies. The Government however will need to put the RM750 million claimed to have been saved during this first round of subsidy rationalization exercise, into good use so that all Malaysians can reap the benefits. Waiting

Prices of Items Before and After Midnight, 16th July 2010

Item

Price Before (RM)

Price After (RM)

Increase (RM/%)

Petrol (RON95) (per litre)

1.80

1.85

0.05/2.78%

Petrol (RON97) (per litre)

2.05

2.10 (subsidy removed, price will be floated in the market)

0.05/2.44%

Diesel (per litre)

1.70

1.75

0.05/2.94%

LPG (per kg)

1.75

1.85

0.10/5.71%

Sugar (per kg)

1.65

1.90

0.25/15.15%

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