RISE OF INTEREST RATES, FUEL PRICES AND GST COMING – CONSUMERS DOOMED?

March 5, 2010 on 4:07 pm | In General |

I have no problems whatsoever in seeing an increase of about 10 sen in petrol prices, post May 1, unless we have further brain waves coming out with better fuel subsidy schemes, which is not ideal in the long run!

And yes, it will have an impact on prices of food, services and essential items across the board with individuals and groups attempting at profiteering.

Subsidies are not the answer but in a nation where it has become a way of life from the production of ‘2 minute instant billionaires’ thanks to political patronage what can I say?

Where and at what stage do we start dismantling it without the issues being racialised, bastardized and muddied in certain racist vernacular newspaper without looking at the issues intelligently and with rationale and comparison where we are as a nation with others in the region? - Dr Jacob George

RISE OF INTEREST RATES, FUEL PRICES AND GST COMING – CONSUMERS DOOMED?

Some major ‘tai chi’ moves are being made and I cannot but predict further hard times for Malaysian consumers at the near horizon!

First, I cannot but notice that our ‘ever ready and friendly’ - Bank Negara raised its overnight policy rate (OPR) by 25 basis points to 2.25% giving an indication that the time was ripe to normalize interest rates with the improvement in economic conditions.

Did they cite ‘improvement in economic conditions’ – perhaps from their political positioning and mindsets but from where I stand at the grassroots – it looks pretty screwed up!

If that was not bad enough the announcement by my ministry that there will likely be a slight increases in fuel prices over time now that it has been officially announced that the proposed two-tier fuel subsidy scheme based on vehicle engine capacity has been scrapped will add fuel to fire!

Come let us face it, I liked the two-tier fuel subsidy scheme proposed in theory, which to me appeared good on paper but issues such as implementation and enforcement were questionable!

And worst, they wanted to implement it on May 1?

I thought foolishness was only apparent at the stock exchange!

Now the situation is calmer and clearer!

I have no problems whatsoever in seeing an increase of about 10 sen in petrol prices, post May 1 unless we have further brain waves coming out with better fuel subsidy schemes which is not ideal in the long run!

And yes, it will have an impact on prices of food, services and essential items across the board with individuals and groups attempting at profiteering.

Subsidies are not the answer but in a nation where it has become a way of life from the production of ‘2 minute instant billionaires’ thanks to political patronage what can I say?

Where and at what stage do we start dismantling it without the issues being racialised, bastardized and muddied in certain racist vernacular newspaper without looking at the issues intelligently and with rationale and comparison where we are as a nation with others in the region?

Now coming back to the fuel price thingy and based on US$80 per barrel of crude oil, the Government was currently subsidizing fuel at the pump at around 40 sen per liter so a raise of say another 20 sen maybe warranted and help the government to close the gap on the fuel subsidy which remains unsustainable at the present course!

At the end of the day whatever schemes we introduce we must ensure it is a viable scheme and meet my two major consumer concerns namely that the hardcore poor are not badly affected and the scheme proposed addresses the fuel subsidy issue.

We must also address wastage and abuse across the political landscape!

At the end of the day – with the emerging hardcore controversy of the GST lurking it will take political courage to address these issues plainly and with a motion at wining the ‘hearts and minds’ of voters failing there are rough seas and turbulence ahead!

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