Jun 12, 2008
The Straits Times
Carolyn Hong
KUALA LUMPUR - AS MALAYSIA'S steepest fuel price hike sinks in, Malaysians are bracing themselves for a hard hit to their pockets as transport and food prices are likely to follow suit.
The first ripples can be seen in school bus and intra-city transport companies clamouring to raise fares, as some Malaysians rush to hoard essential food items over fears that prices would go up.
Five days after the government partially lifted subsidies on fuel, the impact has yet to be seriously felt, though - largely because prices of essential items and public transport are tightly controlled.
Malay newspapers Utusan Malaysia and Berita Harian, which carried out food surveys in various states including Johor, found no major changes in prices since the fuel price hikes last Thursday.
But this is unlikely to remain the case. Vegetable farmers' associations have already warned that prices could go up within the next few weeks, and lorry operators have increased their charges by up to 50 per cent, which will inevitably affect the prices of food and other items soon. A big bottle of corn oil, for example, has already gone up by RM3 (S$1.30).
The cutting of fuel subsidies last week saw the price of petrol rising by 41 per cent, and diesel by 63 per cent. Electricity tariffs will go up 26 per cent.
Dispatch worker Majid Bakar, who has four children, is one of many worried about the price hike. With a monthly income of RM1,400, he is now paying RM4 more in petrol every day for his motorcycle.
'Food is expensive. The price of rice has gone up to RM3 a kg from RM1 plus, and now more prices will go up while our income will not. I have to stop buying toys and new clothes for the children.'
Like many others, he accepts that Malaysia cannot hide from global oil prices, but believes the government has not done enough for the people.
Mrs Hamidah Abdul Hadi, who works in a kindergarten, likewise thinks the gradual rise in the cost of living could soon become difficult to manage.
'We can't raise school fees in the middle of the year and, if prices keep going up, it's going to affect the kindergarten. It's a headache,' said Mrs Hamidah, who stocked up on cereals, oats, bread, rice, sugar and flour over the weekend.
Malaysians will feel the pinch more acutely if the government allows bus and taxi fares to go up.
Pan Malaysia Bus Operators Association president Ashfar Ali told The Straits Times that it has been promised a decision by the end of this month.
While the government still subsidises diesel at RM1.43 a litre for public transport vehicles, this is still 70 sen higher than it was two years ago, when the fares were last revised, he said. 'We are still asking for an increase of up to 100 per cent,' he said.
Economists have forecast that the official inflation rate will jump to 5 per cent from the current 3 per cent, and hit low-income Malaysians the hardest.
Most Malaysians earn below RM3,000 a month. According to Second Finance Minister Nor Mohamed Yakcop, only 1.2 million of Malaysia's 10.5 million workers earn more and pay income tax.
Only 38,500 earning a taxable income of RM100,000 and above are in the highest tax bracket.
While the government is scrambling to contain the fallout, the opposition is threatening to organise street rallies from this week, culminating with a massive one next month.
It has pointed out that Malaysia, as a net oil exporter, earns RM250 million a year for every US$1 (S$1.40) rise in crude prices.
But Petronas chief executive Mohd Hassan Marican yesterday told Reuters that the cost increase is far higher than the oil price increase.
This article was first published in The Straits Times on Jun 10, 2008
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