‘Reveal fuel price mechanism’

Dr Lim Teck Ghee

The revelation by Domestic Trade and Consumer Affairs Minister Shahrir Abdul Samad yesterday that the government has stopped subsidising fuel since early this month raises more questions than answers.

Namely, are Malaysians paying more than required and how much is the government actually making?

In view of this, an economist has called on the government to reveal the mechanism which is employed to determine the price of fuel.

Dr Lim Teck Ghee, director at Centre for Policy Initiatives, said it is disappointing that the government is providing incomplete information to the public.

He said the government expects consumers to accept the price as it is when fuel prices have gone down elsewhere.

“This is bad economic management and shows that the government lacks transparency. They are mismanaging the oil price issue,” he told Malaysiakini today.

“When the price of oil skyrocketed in June, the government was quick to raise prices which led to inflation rising. Now the price of oil has reduced, the government announced they have stopped subsidising.

“The government should reveal the actual figures as to how much they are subsidising and how the present price was arrived at. The figures should be out there in public,” he added.

At this rate, Lim said, the consumers are “maybe subsidising the government more”.

Yesterday, Shahrir announced that the government had ceased fuel subsidies since the start of November as global crude oil price dipped below US$65 per barrel.

Trend should have been anticipated
Meanwhile, Universiti Malaya economics lecturer Prof Dr Raja Rasiah also agreed that the prices of fuel in Malaysia should be lesser. ¼br /> According to him, it appears that consumers are now subsidising the government.

Raja said although he does not have the actual figures, his observation was based on the government’s announcement that it paid 30 sen per litre in subsidies at the height of fuel oil price hike when consumers paid RM2.70 per litre as prices of crude oil skyrocketed to more than US$130 per barrel.

“Now that the price of oil has dropped, it seems to me we are still paying more. The government should have anticipated the trend fall. Hence, the price charged now should have been lower to what we are currently paying,” he said when contacted.

Although Raja Rasiah noted that oil prices vary and are determined by the market forces, he however said there has been a sharp drop in oil prices in recent months.

“This was the impression that we have where we are still paying more, although the prices of oil had fallen. The government should reduce the current price a little bit more,” he said.

Prices of goods remain
Commenting further, Lim said although the government reduced the price of fuel, it does not necessarily translate to a reduction in prices of other products.

“Unfortunately, prices, when they go up, get sticky and the likelihood of them coming down will take a long time.

“That is why I say the government’s earlier move to raise the price of fuel was in a sense badly timed. It has resulted in inflation and the government is partly responsible because of this,” he said.

Lim reiterated that the prices of goods will not come down to a fair level immediately despite consumers demanding for this.

“That is why I feel the government has mismanaged the fuel pricing issue,” he stressed.

Before the government decides on a policy shift, Lim said, it should hold dialogues, discussions and meetings with the stakeholders.

“The government needs to make a careful and considered decision. They should seek or get more input from other stakeholders including business groups, consumers or others. Do not rush in making decisions.

“Raising prices will result in significant market movements. Hence, you need to get careful assessment and need input from important stakeholders before arriving at a decision.

“As you can see, the prices of other products have not reduced that much,” he added.