Shahrir: Dump petrol prices subsidy - Malaysiakini

Beh Lih Yi

Nov 7, 07 5:09pm

Malaysians must discard their ‘subsidy mentality’ and allow petrol prices to go up - this double whammy of a proposal comes from vocal Umno politician Shahrir Abdul Samad. Amidst pressure on the government to cut subsidies, especially for petrol due to record-high world oil prices, Shahrir argued that it is time for the nation to bite the bullet.

An Umno supreme council member and Johor Bahru MP, he said Malaysians will have to move away from a heavy dependence on subsidies, especially for petrol since this is depleting the government’s coffers the most to date. Although critics have considered infrastructure development to constitute ‘mega projects’, he pointed out that the “real mega project is the money used for subsidies”.

“This country is heavily subsidised and we have refused to budge from this,” he said in an interview.

“That’s why I insist that petrol prices must go up. We can’t afford to (continue) subsidising petrol prices. We have to move away as much as possible from this because it’s going to people who don’t deserve it.” Urging the public to adopt a mindset change, he said greater consideration should be given to the country’s future.

“(People argue that) Indonesia has removed petrol subsidies because (state-owned oil and gas company) Pertamina is not doing well,” he said.

“They ask why we can’t subsidise when (Malaysian state-owned) Petronas is doing well (and say) we must use all the Petronas profits... but what do we do for the future?”

‘Face reality’

World oil price hit a new high at more than US$96 (RM336) per barrel last week. Analysts expect the price to rise to US$100 (RM350) a barrel by year’s end.

The government reportedly spent some RM16 billion in subsidising petrol prices in the first eight months of this year. The figure stood at RM15 billion for last year. Should the petrol prices subsidy is completely removed, it has been estimated that Malaysians may have to pay up to 40 percent more.

A sharp hike in fuel and electricity prices in February last year had prompted widespread public outrage and massive street protests, with government pledging not to raise the price this year. Nevertheless, with the latest development, International Trade and Industry Minister Rafidah Aziz said last week that it was not viable for the government to maintain fuel subsidies at current levels. She was quoted as saying that the private sector had been told of a potential increase in fuel prices and that players in the sector “accept the fact”.

“They are pragmatic, and only hope the increase won’t be too steep,” she reportedly told national news agency Bernama.

Shahrir, meanwhile, also argued that the “24-hour lifestyle” of Malaysians is not good for the country in economic terms, as it leads to additional costs - among these, the need to maintain the presence of foreign migrant workers, and the cost of security and law enforcement.

He added that not many countries have such a lifestyle, and that Malaysia should work towards reducing its reliance on migrant workers in this sector.