Sunday, June 08, 2008

Fuel price hike unreasonably steep

Discarding the subsidy mentality once and for all

The fuel price hike that came into effect on 5.6.08 is not something that was unexpected but the quantum of increase and the abrupt way it was implemented caught all Malaysians by surprise. There was no space given for the people to prepare for this sudden increase in their expenditure. It has suddenly thrust a huge burden on those from the lower income group who are already finding hard to make ends meet. They are ill prepared to face this new obstacle and are going to suffer the consequences for a very long time to come.

While the increase may be inevitable, why was no warnings given? It looks like the government refuses to appreciate the plight of the people at large and keep making the same mistake over and over again.

Most Malaysians accept that the fuel subsidies cannot continue forever and it has to stop some time but it would only be fair for the people to be given ample time to adjust their lifestyle to the price hike. Is that asking too much? It is unfortunate that instead of gradually tailing off the subsidy, the government has chosen the cold-turkey treatment which will be more painful to the people.

The people would be more receptive to accommodate fuel price hikes if the government illustrates its willingness to channel the money saved from the subsidies for greater long-term benefits. It has promised a better public transport the last time fuel prices were raised but till today we are yet to see any tangible improvements in the service. It has failed to appreciate the urgency of reorganizing to improve the internal road, rail and flight services, which are in deplorable conditions. In fact our public transport system is disorganized and in a state of utter chaos.

The government should also start spending the extra money into improving, not privatizing, other essential services such as the health, education and housing especially for the poor. These basic public amenities and services must not only be of acceptable quality but at the same time be made more affordable to the ordinary rakyat. Privatization has only aggravated the cost of these services and thereby only benefited the rich. The poor continue to get only suboptimal services.

There is a need for greater accountability and transparency in the management of the money saved on abolishing the fuel subsidies. The people need to see that the government is serious in channeling the money for the right purposes as past experience has shown that the money is actually channeled elsewhere for the benefit of a selected and privileged few.Unfortunately a lot of promises have been made but the implementation is far from satisfactory.

It is also timely for the government to review subsidies in all other areas. Greater emphasis must be given to increasing productivity and reducing wastage and fighting corruption rather than providing subsidies. If we are to successfully compete in the globalized world, we must get rid of the subsidy mentally as it is the survival of the fittest out there. However it must be stressed that the abolishment of these subsidies must be well planned and implemented gradually so as not to cause undue hardship to the people.

There is a need for the government to overhaul the financial management of the country by implementing an agenda that is tailored to the overall welfare of the people. It should practice transparency, accountability and prudence in its spending and be serious in fighting corruption, wastage and mismanagement at all levels of the administration. Only by doing so it will be able to create a more equitable and dynamic society for all.

Dr.Chris Anthony

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