Anwar says latest hikes bullies the poor, empowers BN cronies

KUALA LUMPUR, Dec 4 – Datuk Seri Anwar Ibrahim heaped criticisms today on Putrajaya’s latest subsidy removal stunt, claiming the government was bullying the poor by failing to impose similar cuts on “subsidy monsters” like the Independent Power Producers (IPPs).

The opposition leader pointed out in a statement today that the latest price hikes on daily essentials like sugar, diesel and liquefied petroleum gas (LPG) was clear proof of the ruling Barisan Nasional government’s practice of “double standard” and “flagrant inconsistency”.

The hikes, he added, only served to cancel out Prime Minister Datuk Seri Najib Razak’s ambitious promises of economic reforms in his just-unveiled New Economic Model 2 (NEM) yesterday.

“While BN claims the quantum of these price hikes is too small to have an impact on the public, the policy direction that is taking place cannot be mistaken.

“BN, through Pemandu has outlined a subsidy removal plan to impose a six-monthly price hike on RON95 fuel and the announcement last night confirms that similar price hikes will take place in the future and perhaps at an even bigger quantum,” he said.

In the original plan, Anwar added, the proposed quantum of price hike was at 10 sen per hike for every six months, leading to the reasonable assumption that prices would likely soar again by mid next year.

Pemandu (Performance Management and Delivery Unit) CEO Datuk Seri Idris Jala announced yesterday that the prices of fuel and sugar would increase today as a part of the Najib Administration’s ongoing drive to phase out subsidies.

In the latest hike, the price of RON95 was increased by five sen to RM1.90 per litre, diesel by five sen per litre to RM1.80, LPG by five sen to RM1.90 per kg and sugar by 20 sen to RM2.10 per kg.

Through these price hikes, the government expects to save subsidy payments of RM621.9 million on RON95, RM213.2 million on diesel, RM63.5 million on LPG and RM283.5 million on sugar a year, or a total of RM1.18 billion annually.

This is the second wave of subsidy cuts following the first round of hikes on July 16, when prices went up by five sen per litre for petrol and diesel, 10 sen per kg for LPG and 20 sen per kg for sugar.

But Anwar pointed out today that although the phased subsidy removal plan also included the removal of subsidies to corporate giants like wealthy IPPs owned by “business elites and BN cronies”, the latest price hike did not reflect this.

“Amazingly, the only hikes implemented so far are on those items that hit directly on the people’s purses and not the cronies’,” he said.

Anwar explained that the government, through Petronas, currently subsidises IPPs and industries a whopping RM19 billion annually as the subsidised gas price of RM10.70 per mmbtu (for IPPs) was significantly lower than the average market price of imported gas of RM38 per mmbtu.

Additionally, he pointed to a Pemandu estimate that the government could save at least RM1.12 billion in 2010 if subsidies to IPPs and the non-power sector were to be reduced.

“This can be achieved if gas price to IPPs and non-power sector is increased by RM4.65 per mmbtu and RM2.52 per mmbtu respectively.

“Therefore, the Prime Minister and his government must answer why it is hell-bent on pushing for subsidy removal on fuel, sugar and LPG that will undoubtedly increase the burden of the lower income group, when similar zeal is not shown vis-a-vis the rich corporate giants,” he said.

Pemandu, he said, was “extremely efficient” in pushing for subsidy removal yet “extremely slow” at coming up with a solution to redistribute the subsidies meant for the poor.

Anwar added that funds to operate the government unit itself ate up at least RM131 million – RM66 million to consultants to set up the unit and another RM65 milliuon for its 2010 operations – which paled in comparison to the RM126 million purportedly saved during the last round of subsidy cuts in July.

“BN talks about the necessity to reduce subsidy in order to cut the nation’s deficit as a result of its carefree spending in the last decade. It chases the small change in the form of subsidy removal on household items most widely used by the people, yet it procrastinates on confronting the real subsidy monsters (IPPs).

“In the end, the RM126 million saved from the July cuts on sugar is not even enough to pay for Pemandu’s exorbitant cost,” he said.

As such, Anwar said he viewed the latest NEM report with scepticism as the “ambitious ideas” outlined in the document never once translated into effective implementation.

BN, he added, had proclaimed of an intention to transform the public sector but at the same time, it was willing to pay its “new breed” of civil servants in Pemandu “top of the range” salaries.

He also noted that while NEM 2 had dedicated a substantial focus on the promotion of global competition through liberalisation and deregulation, the government continued to practice cronyism behind closed doors.

This, he said, was proven in the recent YTL-700MHz debacle when it was revealed that the government had discreetly allowed the corporate giants YTL Communications Sdn Bhd, a unit of tycoon Tan Sri Francis Yeoh’s YTL property-to-power group, to operate in the prized 700MHz spectrum without open tender.

“There is a patent of flagrant inconsistency between the public pronouncement and the honesty to carry out the announcement. This is not surprising as the whole machination of this administration is based on the perpetuation of a public image crafted by firms of public relations that are paid by the taxpayers’ money – with the sole intention of buying BN additional time before the people cast their judgement,” he said.

Anwar then cautioned the public against falling into BN’s public relations trap and urged them to keep a vigilant eye on the coaliton’s every decision.

“If we fail in this endeavour, we are definitely en route to paying a fuel price at RM2.10 per litre within a year’s time,” he said.

Earlier today, DAP’s Petaling Jaya Utara MP Tony Pua told The Malaysian Insider that the latest fuel price hike had come as a surprise as it had been agreed upon recently during a subsidy rationalisation laboratory that subsidies for IPPs would be dealt with first.

“As a holistic plan, all those who attended the laboratory, including myself, the Khazanah CEO, Pemudah chairman and other industry players, were in unanimous agreement that IPP subsidies should be a major priority.

“But now, the whole purpose of acquiring feedback was just a show and there was no intention at all to follow up on our findings,” he said.

DAP’s Taiping MP Nga Kor Ming, echoed his colleague’s view and urged the Najib Administration to explain where Petronas’ payment of RM592 billion to the government had gone and how it had been squandered away.

The government, he added, should amend the Petroleum Act 1974 which stipulates that only the Prime Minister had access to Petronas’ accounts.

“And now, we are subsidising in the billions to IPPs when Malaysia currently has a power reserve at 52 per cent. This is one of the highest in the world, way past the international benchmark. In the US, its power surplus is merely at five per cent, in Japan it is five per cent, China has eight per cent and Malaysia, we have 52 per cent.

“Energy is not something you can store. If you fail to consume, it burns out and this is a great wastage,” he said. - Malaysian Insider