ONE of the main running arguments over the recent tweaking of the diesel subsidy is that it would contribute to higher cost for goods and services since it would be more expensive to physically move them.
It is a truism of course that hikes in fuel prices, especially, would result in corresponding increases down the line as it is key to transportation and logistics.
Only in the case of the recent rationalisation of the diesel subsidy, it should not.
The exercise has gone out of its way to make sure the critical sectors – and transportation is one of them – to continue getting subsidised diesel. The exercise is designed to cut abuses, save money, and yet make sure that those in need will continue to get the fuel cheap.
Yet if prices of goods and services were to go up, regardless, who do we blame?
As far as I know, up and down the food chain, the cost of transportation has been ring-fenced and cannot be a reason to increase prices. The only area not subject to control is at the end – the prices consumers are charged.
While the government determines the price of diesel, the teh tarik is the remit of someone else.
In 2008, the government tried to rationalise fuel subsidies by hiking petrol by 78 sen and diesel by RM1 almost overnight. Along with the expected hue and cry that ensued, businesses raised prices.
The soya bean stall in the neighbourhood market, a favourite of the family, did, too, the owner shrugging her shoulders as if saying what could she do? Customers, while unhappy, understood. Reality bit. It was not her, it was the government.
Yet, when the government succumbed to pressures soon after and fuel prices reverted, hers remained. While I understood her reasons for raising the price, I was nevertheless disgusted by the obliviousness to the reversal and the greed to the suddenly wider profit margins.
And I bet, over time, with the consumers’ propensity to blame the government at every turn, she must have raised prices a few more times since, shoulders shrugged, guilt free. I know she does not need my patronage, and I have not been at her shop since then.
Some 23 transport and logistic-related categories and services will continue to get subsidised diesel, hence theoretically the argument that the exercise would raise transportation costs is not tenable.
Social media, the unfettered town square that it is, does well to fuel misconceptions and mischievous efforts to paint the exercise beyond what it is meant to be.
Less discussion on why too much was spent on the diesel subsidy, or the abuses, such as via smuggling and illegal commercial use.
In 2019, the diesel subsidy was at RM1.4 billion and in 2003 it was RM14.5 billion, despite the fact that the number of diesel vehicles have not grown proportionately as much.
As a result of the exercise, it is reported that at fuel stations in border towns, the long lines for diesel are gone.
There are also some industries complaining that they are affected, ignoring the fact that they have been abusing the subsidy to keep their costs low. For instance, the construction industry is especially widely believed to have survived on cheap diesel not meant for it.
We are now a few weeks into the rationalisation exercise, which should save the country some RM4 billion annually, and as expected, there are many teething problems, especially with the fleet card issuance and the approval of the RM200 monthly subsidy.
Individuals and small business owners denied can always hope the registration process that many complain about will improve along the way.
However, the fear of rising cost of food and services remains. There will be people who would see this as an opportunity to raise prices because there are expectations that they will go up. It is a self-fulfilling prophecy, sort of. I think a few sens would be added soon for my teh tarik, not because it is called for, but because it can.
We must make them – like the soya bean lady who is the bane of my existence – accountable and to feel the consequences of their actions.
Yet, for an audience largely uninterested in the fine print or to understand the need to reduce the RM70 billion in subsidies spent in 2023, the government is either irresponsible or insensitive. This, of course, makes for great political fodder.
There are many bad actors in a politically opportune moment such as this. I think those who take the cake are the ones who understand why things happen, and decide, for political exigencies, to keep quiet, or worse, to deliberately trigger an uninformed audience by being selective and untruthful in their comments.
Parliament is sitting next week, and one could expect diesel to be top and centre. I am keen to see who would be responsible and who would be opportunistic in their debates.
To argue that keeping the previous diesel subsidy regime, with known abuses and leakages, and expecting the country’s financial position to be fine will perhaps be the biggest fib they have, to stoke the anger of an already angry, confused, and hurt populace.
It is irresponsible, almost villain-esque. I would throw the teh tarik at their faces, except of course it could be more expensive. – June 20, 2024
Veteran newsman Datuk Zainul Arifin is Chief Executive Officer of Big Boom Media, which publishes Scoop. He has held numerous posts including CEO of Media Prima Digital, Group Managing Editor of New Straits Times and as a correspondent in New York and London.