Double whammy of GST, fuel hike

The timing of the 20-sen increase in price of RON 95  just before Budget 2015 seems to be an ‘inducement’ to the stream of goodies the Finance Minister is planning to hand out to appease the BN’s vote bank.

The sudden increase in price of RON 95 has created a real fear of multiple price increases across the board, which are already visible. The GST implementation on 1/4/2015 would be a double whammy for people.

Media reports point to Finance Minister and Prime Minister Datuk Seri Najib Razak announcing goodies and handouts in the coming Budget 2015 such as the increase in BRIM payments and lower income tax rates.

And it is estimated that up to 80% of Malaysian households are already receiving the BRIM.

The reduction of the 20-sen subsidy is aimed at the eventual elimination of fuel subsidies to reduce Malaysia’s fiscal deficits.

But subsidies were first introduced to reduce the financial burden of workers, whose salaries were suppressed and have stagnated to attract foreign companies.

The Malaysian government curbed workers’ rights and their wages to induce MNCs and FDIs to invest locally.

Low wages became more prominent in Malaysia. This has led to low productivity, poor economic structure and increased addiction to employing foreign workers.

The steps taken have displaced local workers and blocked the move to go into automation and up the production supply chain.

With an incomplete minimum-wage implementation and with about 4 million legal and illegal foreign workers depressing wages, the subsidy rationalization and GST implementation will increase the cost of living and cause people to feel the pinch.

Increasing fuel prices without any increase in wages and without proper effort to automate manufacturing, will worsen the already high income inequality.

It is public knowledge that the top 1% of Malaysians are worth more than the bottom 40% of our population.

The Malaysian household debt to GDP is now at a staggering 86.8% compared with others around us like Thailand – 30%, Indonesia – 15.8%, Hong Kong – 58%, Taiwan – 82%, Japan – 75% and Singapore – 67%.

Any increase in the cost of living will hurt Malaysians most.

Malaysians are already burdened with high house and car prices and now, with a higher petrol price, they will feel the squeeze on spending.

The lower-income households and even middle-income earners are now more vulnerable to multiple prices increases and income shocks.

It’s unfortunate that the government has not improved public transport even though complaints have been there for a long time.

There are many destinations in Malaysia that have no public transport at all.

Bekok town in the Labis district has no public transport.

Residents are mostly oil palm and rubber smallholders and the prices of these commodities are down now.

These small town residents will be affected by any petrol price increase and the GST that will be levied on all goods and services for private transport.

The price of oil has fallen to its lowest level in the last 6 years in the international market.

Therefore, the subsidy rationalization could have been delayed until oil prices firmed up later.


High level of bribery, corruption

The government could have avoided the spiralling effects of petrol on other goods.

Instead, the government chose to act hastily to please fund managers and international rating agencies.

“Malaysia ranks the highest in the levels of bribery and corruption anywhere in the world,” said the Asia Risk report.

About 39% of respondents said that bribery or corrupt practices take place widely in Malaysia, a figure which is nearly double the Asia-Pacific average of 21.

But the government has not announced any measures to rein in bribery and corruption.

No high-profile Umno politician or crony has been charged for bribery or corruption.

On the other hand, the police and the Attorney-General’s office are busy invoking the archaic Sedition Act to silence critics, student activists and opposition leaders.

To save government finances, grants and support for 1MDB and subsidies for toll concessionaries must be stopped.

All government support for private projects, GLCs, government-owned corporations must have transparent accounts. Purchasing expired IPPs at exorbitant prices contravenes all good practices. It looks like Umno’s cronies are, in reality, managing this country. Do we have any hope left?


Explore posts in the same categories: From the desk of Senator S Ramakrishnan

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