Prices of fuel and sugar inch up as government cuts subsidies gradually. The price of Ron95 per litre will be 5 sen higher from today. Sugar will be 25 sen more expensive for every kg, so new price is RM1.90/kg. These are still heavily subsidized, though. Even after the increase, the Government would still be spending some RM7.82 billion on fuel and sugar subsidies this year!
This means that the Najib administration has opted to increase prices - and cut subsidies - gradually. (At one of his subsidy briefings I attended, Idris Jala asked if we'd rather the government cut all the subsidies immediately or gradually over 3-5 years; only ONE participant said the government should cut all subsidies at one go). Does that make any difference or make the price increase less painful? Certainly.
Remember when Abdullah Ahmad Badawi pushed up diesel prices by 63% and petrol prices by 41%? That was cruel. And the time when, announcing the 60% toll rate increase for LDP, Samy Vellu said the government had made sure the hike was "not too high"? Najib Razak has obviously learnt what NOT to do from his inconsiderate predecessor.
Still, nobody is going to be happy with Najib today and in the days, weeks and months to come. We can be thankful that he didn't push up the prices by 60-70 sen at one go but what he'd need to do is tell us, every step of the way, what the government is doing with the RM750 million in savings derived from this first part of the government's subsidy rationalization exercise.
Friday, July 16, 2010
Price increase: Learning from Dollah Badawi's mistakes
At 9:58 am