08 June, 2008

Malaysia's government scrambled to cushion the blow from a 41 percent fuel price hike

Prime Minister Abdullah Ahmad Badawi urged angry citizens to understand the reasons behind the move, and said the government would do all it can to alleviate the burden on the poor.

"Each and every one of us has a role and responsibility in facing these trying times. As such, let's face this challenge together with resilience for the greater good of the nation and our future generations," he said.

"The government has held out for as long as possible to protect the people from fuel price increases," the premier said.

Why Malaysians Have To Pay More For Fuel ?

As far as the government is concerned, cutting back on fuel subsidies is the way to go so as to put its hard-earned taxpayers money into more productive uses like improving educational, health and infrastructure facilities for the benefit of more people rather than allowing it to be guzzled away mostly by motorists.

The government will be tackling the issue head on and will not allow the peoples anger over higher fuel prices to fester. It will announce a number of concrete measures this week to ease the burden on consumers.

There was no way that the government could continue to subsidise fuel when the price of crude oil price had reached almost US$140 a barrel, said Senator Datuk Gooi Hoe Hin who attended the closed-door briefing. However, he said, the government should have gradually reduced the subsidies to match with the international market prices.

"Giving subsidies is like giving opium. Once the people get addicted, it is very difficult for you to take them away because they would start questioning why the subsidies had to be reduced," he said.

Political analyst Khoo Kay Peng said fuel subsidies had escalated drastically since 1982 and when the Abdullah administration took over in 2004, they had already reached a tipping point where it could not continue to subsidise anymore as the oil price had constantly moved up.

He said the Abdullah administration felt that savings in taxpayers money from the reduction of fuel subsidies should be channelled for better use such as improving the public transportation system to benefit more from the lower income group.

"Since 2004, the government had already intended to cut, but I don’t know why it didn't do it. It knows one day that this thing will come. If you keep prolonging it and suddenly you decide to have a sharp cut, definitely the people would be very angry," Khoo said, adding that he hoped that the savings of RM13.5 billion in reduced fuel subsidies would be used wisely and productively.

Malaysia should have done away with most of the fuel subsidies by now and not wait until a situation where the government could not continue with them, he stressed.

Meanwhile, some senior Umno officials have been urging Prime Minister Datuk Seri Abdullah Ahmad Badawi to reshuffle his Cabinet and drop ministers who are not on the same page with him

These calls have grown louder in the last 48 hours after an episode at the party’s retreat on Friday where Foreign Minister Datuk Seri Rais Yatim was criticised by some of his supreme council colleagues for attempting to package demands by him and Tan Sri Muhyiddin Yassin for Abdullah to step down before the party elections in December as a group resolution

Rais stunned his audience when he said that his group wanted Abdullah to effect the transfer of power soon, before the Umno elections. His group included Tan Sri Muhyiddin Yassin, Datuk Azim Zabidi, Datuk Azalina Othman Said and others.

Some of Abdullah’s supporters have told him that there is a need to reshuffle his Cabinet and drop the few ministers who are undermining him or who seem to be working with Tun Dr Mahathir Mohamad to push him out of office soon.

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