12 February, 2008

Price Hikes And Its Impacts On The Elections

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Price Hikes And Its Impacts On The Elections

For the past several months, consumers have been paying unusually more for some essential goods.

In the near future, there is every likelihood that they would be forking out extra sen for every litre of petrol, as well.

On numerous occasions, the government has also hinted that one day, it would have to review the subsidy system which enables Malaysians to pay less as compared to their neighbours for decades, especially petrol, sugar, flour and several other items, as it drains out a large amount of funding which could be used for development.

Thus, it is indeed, an enticing promise from the Opposition parties when they claim there would be no price hike for petrol and essential goods, and no supply shortage for controlled items -- should they be given the mandate to rule the country, come the 12th general election.

Clearly, an act of cashing in on the current inflation situation, the Opposition does not shy away from luring votes in their favour by twisting the truth.

It claims that it is the Barisan Nasional (BN)-led government's failure that we, Malaysians, have to pay higher prices for almost everything of late, while wantonly leaving out the fact that it is a global phenomenon due to the increase in oil prices in the world market.

During meetings with the rakyat, Opposition parties were heard making promises that they would ensure there was no price hike for goods, or increase in toll rates, or higher price for petrol and gas -- if only the rakyat handed them the majority to rule the nation.

An economist viewed the promises as unrealistic and a definite tall order in terms of implementation, especially for a developing nation whose economy is part of the global market.

Senator Prof Datuk Dr Ismail Md Salleh said although it sounded plausible on paper, the strategy was not practical as the government actually had to fork out more for subsidy, especially for imported essentials to alleviate the rakyat's expenditure in shopping.

"The current global economy sees price hikes in everything, due to the increasing price of oil, with business players dumping their extra costs down the chain of supply where in the end, consumers end up paying more.

"If the government wants to reduce this, it has to subsidise at certain levels along this chain of supply," he explained.

He said the practice could eventually affect development processes as more fundings would be channeled for subsidy.

"If the current government has a plan to reduce the amount of subsidy given, I think that should be viewed as a positive move because last year alone, the government had to spend an estimated RM40 billion for subsidy.

That's a lot of money, that I think would be better spent on improving infrastructure or development," he said.

In a way, said Dr Ismail, inflation was an unavoidable aspect in an economy and the rakyat too, have to accept the fact that a small part of this situation needed to be borne by them.

At the same time, he believed that the current price hike was worsened by the election fever as it also meant the government would be spending more for aids and new projects, as well as speeding up the on-going ones.

"In our present situation, the expectation of many new projects from the government prior to the general election, is one of the reasons why we have to pay more nowadays, even for essential goods.

"Whatever projects the government has in the pipeline, automatically means increase in demand, and inability to match supply with the demand will cause a price increase," he said.

On the same note, Dr Ismail was confident that several steps taken by the government, such as the establishment of National Price Council and National Stockpile would help ease the price hike and shortage of supply of controlled items.

"I believe if it is well-implemented, it can take the edge off the present issue. But the government must also step up enforcement to curb smuggling and hoarding activities which is one of the reasons why we are facing such a predicament," he said, adding that smuggling was another downside of the subsidy system.

So far, the government has implemented several strategies to tackle price hike and shortage of supply, including banning a list of items from being taken out of the country.

The move, according to Dr Ismail, would not only control smuggling activities but also prevent consumers from neighbouring countries benefiting from our subsidy as they would no longer be allowed to take those items to their countries even for their own consumption.

Meanwhile, a political analyst said although the people, especially urbanites, currently seemed upset with today's higher cost of living, there would eventually be little impact on the overall support to the current government.

"From what we read and heard, price increase has become a serious issue in the urban areas, especially those with large families. But from my observation, those in rural areas like kampung folks, they are not really concerned about the issue.(Are you kidding?)

"I think this is due to the fact that most of them don't buy items in bulk, like the urbanites do, in which case, the price increase is felt more as compared to buying just one item at a time. Plus, I think kampung folks are easier to please as their needs are simple, like the need for basic infrastructure and BN has done well in that," he said.(Bull Sh*t)

He also noted that BN would not lose support from rural voters based on the grand welcome they accorded BN leaders whenever they visited them.

"We can observe that they are happy to see their country's leaders visiting their kampung and launching new projects. That's why I said kampung folks are easy to please because they have simple needs," he said.

While predicting that some urban voters might be dissatisfied over issues when casting their votes, he doubted their action would be due to the Opposition's promise of no price hike.

"Malaysians are smart. They don't easily fall for that kind of promises. But they might go to the other side of the fence just to express their dissatisfaction in what they regard as the government inefficiency in tackling an issue," he said.

He, however, noted that the Opposition might have played its card right by pointing out to the rakyat that as oil producer, Malaysia should make use of the current situation in the global market and ensure the monies from Petronas benefited the rakyat.

"The government will have a tough job ahead to explain why we need to pay more for petrol, because the issue will definitely come up during the election," he said.

An UMNO insider recently admitted that it was quite a task for the party's machinery to justify the price hike as most voters prefer to blame it on the government's inability to do more for the rakyat.

"News reports on smuggling activities and hoarding supplies are not helping us because these are perceived as another failure on the part of the authorities," he said.

However, he was confident that the issue would not affect the overall support for the ruling party in the coming general election, based on feedback from the ground that most voters also realised there was not much the Opposition could do either, to alleviate the impact of global inflation.

"They realise that the Opposition only wants their support, but once they get it, there's not much they can do. Plus, the Opposition does not have the experience to deal with crises, unlike BN which has an excellent track record," he added.


Read Also :
Judging from the gushing praises, Chief Secretary Sidek Hassan is performing miracles with his Special Task Force to Facilitate Business (Pemudah, its Malay acronym) committee to streamline the civil service. A reality check is in order.

It reflects how out of touch our top civil servants are from the realities on the ground that it took Sidek and his Director-General of the Public Service Department Ismail Adam to make an unannounced visit to a District Office in Selangor for them to realize how difficult it is to pay one’s “quit rent.”

- Chief Secretary Should Not Be Chief Clerk
M.Bakri Musa



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