Khairy says no to petrol hike

By Syed Jaymal Zahiid, Free Malaysia Today

KUALA LUMPUR: Umno Youth chief Khairy Jamaluddin warned the government against raising RON95 petrol price as voters are now struggling to cope with escalating food prices.

The statement came following Domestic Trade, Cooperatives and Consumerism Minister Ismail Sabri Yaakob’s hint yesterday of a possible hike in the basic grade fuel price as the government desperately aims to cut its hefty subsidy bills.


Khairy said the government should focus instead on saving management costs, increasing productivity and efficiency before cutting fuel subsidy.

He cited the National Productivity Corporation’s estimation of the cost of fulfilling government guidelines for economic activities. The government agency said this would cost taxpayers RM17 billion per year or 2.5% of the gross domestic product (GDP).

“This is 21 times the savings from subsidy cuts for sugar and oil-based goods in July 2010 and 14.4 times for the same cuts in December last year,” Khairy said in a statement.

Signs that the government are preparing for more subsidy cuts had been made clearer when Deputy Prime Minister Muhyiddin Yassin said this morning that the government could not sustain its subsidy cost.

He said that the subsidy burden was expected to double this year from RM10.32 billion to RM20.58 billion.

Escalating public debt and a record budget deficit have forced the Najib administration to reduce subsidies on several basic items like fuel and sugar already undergoing subsidy cuts.

However, rising cost of living and low wages have put pressure on Prime Minister Najib Tun Razak to channel more funds into existing subsidies.

Observers say potential voter backlash over escalating cost of living has given the opposition more ammunition, forcing a delay in subsidy cuts .

Najib said recently the government is willing to fork out an extra RM4 billion in addition to the RM10 billion allocated for subsidies this year.

The Barisan Nasional (BN) government has tried hard to allay public fear by giving assurances that inflation would be kept in check, but Malaysian salaries are not keeping up with the steadily rising cost of goods.

Are there other ways?

Khairy said although inflation rate on consumer goods as of March stood only at 3%, the price of non-alcoholic foodstuff rose by 4.7%.

“If you look in detail, beef rose by 7.6%, eggs and milk by 7.9%, vegetables 11.4%… all higher than the average 3%,” Khairy said.