The rise in crude oil prices presents a dilemma for Malaysia in that whilst high prices boost the government's revenue, it also raises the cost of maintaining fuel subsidies. The eventual withdrawal of all fuel subsidies is a real probability and this means that immediate and ongoing preparations should be effected to face the resulting challenges. The government and the people can work hand in hand towards this goal, with the government leading the way.
This is what the government should do:
- Curb or halt those government mega-projects that are not critical or essential, and divert funds towards critical projects or measures that will benefit the public, for instance, the improvement of the public transport system.
- Urgently upgrade the transport system nationwide. Without this measure, the government should strictly prohibit any price increases in this sector. An efficient, accessible and affordable transport system would serve to reduce the number of cars on the roads. It would also ease the burden on the lower income group, as this group is known to spend a sizeable percentage of their income on transport.
- Educate the public on the larger picture of the negative aspects of fuel subsidies, and what can be achieved as the subsidies are withdrawn. Public acceptance of higher fuel prices will be better if the government carries out campaigns to explain the exact situation.
- Have a full disclosure of details of government spending where the public can see and understand how government funds are being used. Following this, the cooperation between the government and the people can be encouraged - to increase efficient use of resources and to reduce wastage.
- Lead by example in adopting more efficient use of resources as well as reducing wastage. This will send a powerful message to the people, and there will be more willingness to follow suit. The recent call for government departments to control air-conditioner usage is an excellent move, and similar measures should be initiated in other areas. For instance, it has become common practice to hold government seminars, conferences and meetings in hotels. Expenditure is increased, energy consumption goes up and there is also food wastage. Some of these functions could be held in government buildings or public halls, and meals can be catered in moderate quantities at lesser costs.
- Encourage businesses and consumers to increase efficiency and cut down wastage. For instance, certain food outlets have a policy that food not consumed within the day is to be thrown away. Workers are not permitted to eat or take home any of this excess food. All major religions regard food as something to be valued and appreciated, and wastage is not encouraged. Better planning of food quantities should be encouraged. Arrangements can be made to distribute any excess food to workers or others who have a need for food. Customers who waste food at buffet meals could be charged for any excess food that they have taken but not consumed. There could even be some form of legal punishment for those who deliberately waste food.
- Control the price of cooked food and drinks. Price ceilings should be set for some of the common items such as cooked white rice, chicken, fish, and vegetables and drinks. At the same time, the public must be encouraged to eat more home-cooked meals.
- Divert the funds that are saved following subsidy removals to projects that will benefit the nation, such as more low-cost housing, improved healthcare delivery, better transport systems and school facilities.
- Provide incentives for fisherman, farmers and those in the transport business to offset the increase in costs and to enable prices of goods and services to be contained. The role of Fama, LKIM and transport bodies could be re-examined, and ways can be determined where they can contribute to ease the burden on these groups. The role of the middlemen should be abolished and farmers should be given the opportunities that enable them to sell their produce direct to customers.
- The effect of removal of fuel subsidies are not greatly felt by some transport groups who buy fuel in bulk, and this method of procurement could be studied and employed in other sectors.
- It was reported in the press that a hauliers association was calling for a temporary halt in issuing licences to new companies until proper research can be conducted on the demand and supply situation of the industry. The move to control the number of licences issued may be necessary, but at the same time, the simultaneous measure of stricter price control over existing haulier services would be necessary. One taxi operators association was calling for the government to abolish the sales tax on taxis. This incentive may be necessary, but it must be accompanied by strict pricing control of services subsequently.
- Set up a fund to provide loans to petty traders, hawkers and small businesses, enabling them to avoid loan sharks.
- Encourage the nation as a whole to focus on savings, and to spend wisely. The 'debt culture' with the increased use of credit facilities should be discouraged. If necessary, the government should advise the public to boycott certain excessively-priced goods and services.
If the government leads with clear cost-containment and energy saving measures in response to rising global oil prices, the nation will respond.
The writer is president of the Consumers Association of Penang.
