Barisan and Pakatan up in arms about fuel hike

Scores of cars lining up to pump petrol yesterday before the price increase. Putrajaya’s move to raise fuel prices has drawn flak from Pakatan Rakyat and Barisan Nasional. – The Malaysian Insider pic, October 2, 2014.

Putrajaya has come under fire from Barisan Nasional and opposition leaders for the latest fuel hike, which they said will burden lower-income Malaysians already struggling to make ends meet due to rising cost of living.

Malaysians are bracing for the goods and services Tax (GST) which will take off next April, and slashing subsidies of RON95 petrol and diesel, which saw prices go up by 20 sen, will cause inflation to rise further, they said.

MIC Youth chief Sivarraajh Chandran said even if the BN-led government increased cash payments to the lower income group through the Bantuan Rakyat 1Malaysia (BR1M), the aid is just a one-off payment that will not help households to manage their finances in the long run.

"The hike will cause a chain reaction with prices of other essential goods and service also rising. It will inevitably increase the people’s cost of living and the poor will be the hardest hit of all," he said in a statement.

He said the hikes might affect BN's support as the low-income group, who mostly live in rural and semi-urban areas, will be among the hardest hit by the fuel hike.

Since midnight, RON 95 had cost RM2.30 per litre, up from RM2.10, while diesel is pegged at RM2.20, an increase from RM2 previously.

PAS vice-president Tuan Ibrahim Tuan Man (pic, left) said inflation, as a result of the impact of the fuel hikes, will be fully felt within the next three months.

This would be followed by the implementation of the GST, which will take effect from April 1 next year.

In citing the “2H2014 Economic Outlook: External Positives Amidst Domestic Challenges” report, Tuan Ibrahim said countries like Australia, Singapore and China saw their inflation spiking after the broad-based consumption tax was implemented and only eased two years later.

He warned Malaysia too would not escape such a scenario next year.

"2015 will be a difficult year for the people, especially if taken into account the inflation effect from the current fuel hikes.

"Brace yourselves. BR1M totalling RM1,000 or an average of RM83.33 a month will not help the people to face this," he said.

DAP assistant publicity secretary Teo Nie Ching said even with the subsidies slash, the government estimated that it still needs to spend over RM21 billion in subsidies for fuel and liquid petroleum gas (LPG) this year.

She said Putrajaya had allocated RM22.341 billion for petrol, diesel and LPG subsides in the 2014 Budget.

"The first question is, where did the balance of RM1,341 billion go?" she said in a statement.

She said although the government was subsidising RON95 at RM0.71 per litre, ample global oil supplies have weighed on crude oil prices in recent months, sending Brent, the global benchmark, to below US$100 (RM325) a barrel for the first time in 16 months.

"Even before the subsidy reduction, the government could have saved a lot following the oil price fall," she said.

The latest fuel hike was announced by the Domestic Trade, Consumer Affairs and Cooperatives Ministry yesterday evening.

The ministry said the move was in line with its subsidy rationalisation plan.

"Despite the increase, the government will still need to spend more than RM21 billion on fuel RON95, diesel and LPG subsidies for this year.

"This move is in line with the subsidy rationalisation plan by the government to ensure that the country’s finances remain strong," the ministry said in a statement yesterday.

The ministry also said the move is aimed at preventing fuel smuggling to ensure the current subsidies of the commodity is not abused by irresponsible parties.

The ministry added that people-centric incentives, including increased amounts of the cash handout programme Bantuan Rakyat 1Malaysia (BR1M), will be given to the needy and lower-income groups to offset the burden of higher fuel prices.

The last time Putrajaya slashed fuel subsidies was on September 2 last year with a 20 sen reduction in RON95 petrol and diesel subsidies, and a 15-sen subsidy decrease in RON97 petrol two days later, causing outraged Malaysians to form long queues at petrol stations to fill up and take to social media to express their views.

Economists, however, have hailed it as the right move to address the ever-increasing government debt.

After last year's fuel hike, Najib said the new prices would save the government at least RM1.1 billion.

- TMI