The 20 cents increase in RON 95 and Diesel will have a significant impact not only in the transport sector but to every consumer sector through a general increase in the price of almost all goods and services. The increase in the cost of living will affect all consumers but especially the low-income consumers and the marginalized.
Though the rationalization of subsidies has been justified by saying that it is a move towards decreasing the fiscal deficit as well as to decrease the dependency of consumers on subsidies and the burden of government on unsustainable expenditures on subsides, the issue is, are the mechanisms in place to prepare the rakyat for the price increase and to help them reduce the impact of the price increase burden. FOMCA thinks it is not.
Firstly, every time the subsidy for petrol based products are reduced and prices increase, the consumers are given strong assurances that the saved monies shall be used to enhance public transport. With a good and viable public transport consumers have a choice of using their private cars and thus higher fuel charges or taking the public transport to reduce the expenses. It should be noted that in urban areas, next to expenses on food, the next highest expense is on transportation. Thus consumers can manage their finances better by reducing the transport expenses by using public transport.
Yet, till today public transport, both in the Klang Valley and throughout the country is atrocious. It is simply not viable as a reliable and efficient transport system both for work or leisure. The public transport system is fundamentally a failure. The bus systems are not efficient and reliable. We still have taxis refusing to use meters. No consumer can rely on the public transport has a way of daily living; he still has to depend on his private car to get to work and for his personal and family needs.
When the Land Public Transport Commission (SPAD) was formed, there was full of hope and optimism for the consumers. After the endless issues of public transport in so many different agencies; the Commission was a central and unified agency focusing exclusively on public transport with the powers and resources to address the issues and build a viable and reliable public transport system.
Yet apart from its focus on the MRT and the LRT system, nothing seems to have changed. Bus systems are still unreliable. Taxis still whether they want to stop for you or not, whether to take you or not or whether to use their meter. After another bus crash, when consumers die, SPAD scrambles to form another investigation committee.
The government, if it serious about public transport should revamp SPAD and appoint serious and professional members to make a significant impact of public transport on the daily life Malaysian consumers. Consumers should feel the impact of the Public Transport Commission.
Today with an inefficient public transport, every consumer with any form of private transport will be hit with no real alternative to reduce transportation costs.
Secondly, a price increase in petrol will affect all goods and services. There have already been reports for example of teh tarik prices in some restaurants having gone up by 20 cents hardly two days after the price increase announcement. Substantially more than the 0.1% the government says it will allow and enforce.
While certainly all consumers will be affected, the poor and the marginalized will be affected most. Yet what is the mechanism in place to lessen the impact of the increasing cost of living? An occasional and ad-hoc BRIM is certainly not the answer. It hardly helps people address the cost of living issue.
What is needed for the poor is a comprehensive safety net system that ensures a minimum standard of living. Rather than a one-off BRIM based on when and if the government feels like giving, a safety net would address a comprehensive set of support, including food, education, housing and public transport. There will also be support in terms of employment opportunities. Thus any price increase would ensure that the poor do not face the full brunt of the increase.
Without the safety net in place, the poor will feel the full brunt of the overall price increasing encompassing almost every part of their lives. Another or even a higher BRIM is certainly not the answer.
Other issues that the government also needs to look at in preparing the people for price increases, or tax introductions includes access to affordable housing, removing price distortions in the market through Approved Permits and other non-competitive behaviours and profiteering by traders.
Additionally an open and transparent government would build confidence in the taxpayers and consumers that the additional monies that they are paying will benefit consumers and not be wasted or “leaked”. Good governance is crucial in ensuring confidence in how the subsidy savings or new taxes are being spent.
While in the long-term the rationalization of subsidies may be necessary; to help consumers cope with the price increases, at the very least the Government should have the basic mechanisms and systems in place to help consumers cope with these price increases.
Datuk Dr. Marimuthu Nadason