‘Falling ringgit may have caused price hike’

Bus operators say the depreciation of the ringgit against the US dollar may have forced the government to increase petrol prices, as the commodity is traded using the greenback.

PETALING JAYA: Several local bus operators are of the opinion that the shrinking value of the ringgit may be the reason for the increase in the price of RON 95 and diesel by 20sen.

However, the bus operators told FMT they would not increase the bus fares without the government’s permission.

A bus operators’ association official, who declined to be named, said the government was feeling the pinch of late following the depreciation of the ringgit against the US dollar because now they have to fork out extra to subsidise petrol, as crude oil is traded using US dollars.

The federal government has allocated RM24.8 billion for fuel subsidy this year, and the price increase which came into force today is expected to save them RM1.16 billion.

Another bus operator said the increase in fuel prices was because of the ringgit coming under pressure.

“Our rating has gone down, we have borrowed massive amount of money to fund huge infrastructure projects such as the Mass Rail Transit (MRT), and our foreign direct investment is not flowing in well.

“The government has to react to push up our credit rate, and one way of doing this is by saving money,” said the operator.

The operator was alluding to recent reports that Malaysia’s economy was facing risks from rising domestic debt, a growing fiscal deficit and a shrinking current account surplus.

According to the investvine.com report Bank Negara had cut the country’s growth forecast to 4.5-5% , while the Fitch Ratings had lowered Malaysia’s credit rating outlook to negative from stable, citing a lack of fiscal reforms.

The budget deficit hit 4.5 per cent of gross domestic product in 2012, and the ringgit has shed more than seven percent against the US dollar in 2013, it further noted.

Bus operator: Give us more subsidy

Meanwhile Metered-Taxi Drivers Joint Action Group chairman Amran Jan said the government’s overspending during the election season might have burned a hole in its coffers.

“I know after the every general election, there must be a price increase in basic items such as petrol and food,” he said.

However, Amran said the price increase would not affect taxi drivers because 90% of them use gas.

Pan Malaysian Bus Operators Association president Ashfar Ali urged the government to allow bus operators to extend the 10% surcharge on bus fares that were imposed during Hari Raya season.

He said this would serve as an interim measure to counter the fuel price increase while the government studied the association’s proposal in May to raise bus fares by 30%.

Ashfar also urged the government to consider doubling up the diesel subsidy granted to stage and express bus operators.

“Our operation cost will go up by 5% and we cannot stop the service as it will inconvenience the public.

“If the government does not take our suggestion seriously, slowly but surely many bus operators will close down,” he said.