The Malaysian Trades Union Congress (MTUC) expressed fears today that the low and middle income groups will find it difficult to make ends meet if the government trims subsidies for petrol, diesel and liquefied petroleum gas (LPG) and channel the money towards development projects.

"It will, at best, bring short-term gain for the government, but will most certainly inflict long-term pain on the people," said MTUC president Senator Zainal Rampak in a statement, carried by Bernama.

He said the plan would be a futile exercise as any gains to be obtained from the cuts would, almost immediately, result in increased costs of goods and services, which included development project costs.

"We are concerned that fuel subsidy cuts may result in the government initially winning the match, but eventually losing the tournament," said Zainal.

Negative reaction

The union chief warned that the private sector, which was being encouraged by the government to be the main engine of growth, may react negatively to fuel subsidy cuts by indiscriminately increasing end-stage prices.

"We foresee an almost immediate increase in the prices of essential goods and services such as food, transportation, housing, health and education and these will have a reverse multiplier effect on wholesale and retail prices, erode workers' purchasing power and inflict misery on them," he said.

MTUC suggested that the government looks for more socially viable options to conserve much-needed funds and channel them for national development instead of trimming the subsidies.

Implementing more efficient cost controls in the management and administration of public sectors and reducing wastage is one such option, Zainal added.