Impact of fuel price hike on consumers will be widespread, warns Fomca

The Federation of Malaysian Consumers Associations (Fomca) has warned consumers to brace themselves as it expects the 20-sen increase to the price of RON95 petrol and diesel to have a domino effect on all sectors.

"There will be a negative impact on public transportation, the manufacturing sector, construction as well as the food industry.

"The government should be prepared to face the fallout from the fuel hike," warned its president Datuk N. Marimuthu.

Marimuthu noted that 90% of the public use RON95 which is heavily subsidised as opposed to RON97, which is based on the market price.

"The government is also planning to revise the electricity tariffs, which I think is going to happen soon," he told The Malaysian Insider.

Marimuthu said the government should face the angry public as it has failed to explain how markets operate, how subsidies function and how prices are determined.

"This was never done over the last 56 years and announcements are made as and when the government wanted to hike prices. This is not a good move at all as the public does not like surprises when it affects their pockets," he added.

Domestic Trade, Cooperatives and Consumerism Minister Datuk Hasan Malek had warned traders and restaurant operators not to raise food prices following the move to cut fuel subsidies, which is unlikely to affect food production costs.

He had said the ministry's studies showed that the increase in fuel costs was projected to raise food prices by 0.1%.

“We have done our best to ensure that any move to reduce subsidies would not burden traders. As such, we see no reason for them to mark up food prices as a result of the rise in fuel costs,” he said.

Muslim Restaurant Operators Association president Noorul Hassan said that for now, there would be no price increase in their restaurants.

"We just had a committee meeting and decided that we will just monitor the situation for now," Noorul added without wanting to be drawn in further.

Malaysian Indian Restaurant Owners Association president Datuk Ramalingam Pillai also said that were no plans to increase food prices.

"So far nothing has gone up, so there is no need for an increase," he stressed but said he could not say what the situation would be like in about a month.

Pan Malaysian Bus Operators Association president Datuk Mohamad Ashfar Ali wants fares to be adjusted quickly or the industry be given more subsidised diesel.

He said the government should double the amount of subsidised diesel for express buses to 5,000 litres per bus per month to help the industry cushion the impact to their business.

Ashfar said that currently, the government allowed for diesel to be purchased at RM1.48 per litre for 2,800 litres per bus per month, but added that now, the cost has gone up to RM1.68 per litre per month since the price hike today.

He added that this was necessary as the last fare increase for express busses was in 2008 and the government has not given the go-ahead for another increase although the industry has asked for a 30% fare hike.

"They are still studying the matter and will get back to us in a few months. In the meantime, we need the subsidised amount of diesel to be increased from 2,800 to 5,000 litres," he added.

Federation of Malaysian Manufacturers president Yong Poh Kon said manufacturers too will feel the pinch as logistics will be more expensive.

"As for other energy components like gas and electricity, we hope all future increases, would be done in a gradual, phased manner," he said.