By Yow Hong Chieh | June 01, 2011
The Malaysian Insider
KUALA LUMPUR, June 1 — The government is fooling itself and lying to the people if it thinks the recent round of subsidy cuts will have a negligible impact on inflation, Lim Guan Eng has said.
The DAP secretary-general said the 0.27 per cent inflation increase expected by the government following diesel subsidy cuts and power rate hikes was not borne out by the facts on the ground, where prices of basic necessities have gone up more rapidly.
He pointed out that the withdrawal of diesel subsidies has already led transport operators to announce a rise in transport costs while the price of fish has “soared” because fishermen now found it too costly to put their boats out to sea.
“For BN (Barisan Nasional) to state that inflation will only rise by 0.27 per cent is not reflective of reality and is typical of rich men quoting meaningless statistics to justify wrong policies that hurt the poor and ordinary Malaysians,” he said in a statement today.
Lim also said the government’s refusal to ask independent power producers (IPPs) to bear some of the burden not only taxed the poor in favour of the rich but promoted price distortions that would negate any gains in efficiency derived from the subsidy cuts.
He added the government would be better off terminating its contracts with IPPs and allowing Petroliam Nasional Bhd (Petronas) sell its gas at market price instead of the highly subsidised rate it now offers to the private power sector.
“How, then, can the prime minister develop an innovative culture for Malaysia if such crony capitalistic and anti-competitive practices are permitted in the country,” he said.
The Najib administration announced yesterday it will raise electricity prices by an average of 7.1 per cent from today onwards.
The price charged by Petronas to power companies for the natural gas will rise to RM13.70 per mmBtu from RM10.70, and go up by RM3.00 every month until December 2015, after which market rates apply.
Super diesel subsidies to nine categories of commercial vehicles and Zone C2 fishing vessels will also be terminated starting this month.