Fuel hike means more road deaths, stagflation

A new human disaster in the form of motorcycle fatalities is imminent following the latest petrol price increases.

by Liew Chin Tong

Without improvement in our public transportation system, the latest fuel hike is an irresponsible move that will hurt the lower income group further.

On September 22 last year, when fuel prices were last increased, I referred to research showing that motorcycle fatalities shot up as a result of the March 2006 and June 2008 fuel hikes as the lower income group switched transport modes from cars to motorcycles.

“A new human disaster of more motorcycle fatalities is imminent, following the latest petrol price increase,” I said then.

According to the World Health Organisation’s Road Safety Report 2013, which was released recently, Malaysia has the highest per capita road deaths in the world. We had 25 road deaths per 100,000 people. In comparison, China had 20.5, India 18.9 and Russia 18.6.

Malaysia has the dubious record of having the highest road fatality risk in the world since 1996. Between 2000 and 2009, 4.5 million road accidents were reported and these resulted in 58,582 deaths.

Motorcycle fatalities were three times higher than car fatalities, six times higher than pedestrian fatalities and nearly 50 times higher than bus passenger fatalities.

In other countries where public transport services are adequately and efficiently provided, a petrol price increase will encourage private car drivers to switch to public transport. However, in the case of Malaysia, each fuel hike exercise means more deaths on the road.

The other worrying challenge is that of stagflation due to ill-advised policy choices. The combined economic effect of the latest fuel hike and the implementation of GST next April may bring about the concurrent occurrence of inflation and stagnation, or stagflation.

The Malaysian economy has been heavily dependent on domestic demand as a growth driver over the past five years, that is, since the global financial crisis, which resulted in much lower external demands from advanced economies.

The Finance Ministry has conceded that there will be inflation in the first year of GST implementation and “subsidy rationalisation”. What is yet to be recognised is that apart from inflation, the economy may also grind to a standstill as the disposable income of ordinary Malaysians is reduced by GST and fuel prices, which in turn will result in much slower domestic demand.

Stagflation is the worst nightmare for our economy. But no one seems to have an answer.

Liew Chin Tong is DAP National Political Education Director and MP for Kluang.