No other way
The Star – 6 March 2006
It wasn’t easy but the Government had to do it.   
It had no choice but to cut fuel subsidies to rationalise the prices of petroleum products in the country.  
Datuk Seri Abdullah Ahmad Badawi admitted that while the 30 sen increase would bring some difficulty to the people, it would, on the other hand, conserve the resource, prevent wastage and stop the commodity from being smuggled out to neighbouring countries.  
“It is not a popular decision and the Government will be criticised for it. But it’s not our fault. The world oil price keeps rising and we need to make adjustments. It’s not like we are withdrawing the whole Government subsidy.   
“We are just asking the rakyat to be together with us in making some sacrifices and to understand the reasons for it,” the Prime Minister told reporters yesterday after a dialogue session on oil prices and subsidies with Barisan Nasional grassroots leaders.   
“We are doing what is right for our future generations,” he added.   
Despite the subsidy cuts, he said consumers here paid one of the lowest prices in the world for petrol and diesel.  
Even among Asean countries – with the exception of oil-rich Brunei – Malaysia had the lowest rate at the pumps because of the Government subsidy.  
Citing an example, he said, the actual price of a 10kg cylinder cooking gas was RM32.10.   
“But the Government gives a subsidy of RM14.60 for each cylinder so consumers only pay RM17.50 for it. Many people don’t realise this,” he said.  
Crude oil prices soared to over US$62.91(RM232) a barrel recently. Malaysia raised the price of petrol to RM1.92 a litre and diesel to RM1.58.   
Abdullah said if the Government left it to market forces to determine the price, Malaysians would end up paying a lot more.  
“The Government is actually taking a huge risk by promising not to raise fuel prices anymore for the year because we can’t determine if the world oil price will continue to soar. If it does, we will be in a difficult position,” he added.   
Although Malaysia was currently an oil exporter, Abdullah said it would end up importing oil in four years' time because the resource was fast depleting.  
He said the Government would also step up efforts to produce alternative fuel such as palm-oil derived bio-diesel and promote the use of solar power.  
Rapping profiteers, Abdullah said there was no rationale if car park charges and the price of a cup of teh tarik went up as a result of the higher fuel price.  
“What’s the logic in raising car park fees? What has it got to do with the fuel price? As for teh tarik, sugar and milk are controlled items, so why should the price go up?” he said, adding that the Government would be strict and do whatever it can to stop such profiteering.  
On Petronas, Abdullah said, it contributed RM31bil in the form of taxes, dividends and royalties to the Government for the 2004/2005 financial year – which was an increase of 47% of its contribution the previous year.  
This amount, he added, made up 53% of Petronas’ gross profits of RM59bil.   
On why a portion of Petronas’ increased contribution to the Government was not used to upgrade the public transport system, Abdullah said the money was used for development for all sectors and not exclusively for transport.  
“Petronas has been very responsible. They have made a huge contribution towards the development of the country.”  
The Government had said the RM4.4bil saved from the reduced fuel subsidy would be used to improve the public transport system.  
On whether the Government would reduce the price of petrol and diesel once the world oil prices come down, he said the Government would monitor prices and decide on its response.  
Source: The Star | www.thestar.com.my