'Don't use targeted diesel subsidy as excuse to increase price of goods'

Following the government's plan to implement targeted diesel subsidies as announced by Prime Minister Anwar Ibrahim on May 21, anxiety about a possible increase in the price of goods has begun to rise.

Malaysiakini sought expert views on the issue of expected price increases.

According to economist Geoffrey Williams, there is no reason for traders to increase the price of goods following the adjustment because the diesel subsidy will still be enjoyed through a different mechanism.

He said the new diesel subsidy rationalisation system aimed to reduce waste, leakage and corruption in national spending.

In fact, he said, companies and smallholders who previously received diesel subsidies will receive direct assistance through the Budi Madani Subsidy Assistance Programme (Budi Madani).

“This will overhaul the entire system and limit the diesel subsidy to the target group. Small traders will receive a replacement subsidy under the Budi Madani scheme.

“So, there is no reason for traders to increase the price of goods,” said Williams, the founder and director of Konsultan Perniagaan Williams Sdn Bhd.

He added that if there is any company that raises prices on the grounds of the withdrawal of subsidies, consumers can report it to the authorities or switch to other traders and products.

Give awareness to the public

Williams called on the government to emphasise this to ensure public awareness and confidence regarding the subsidy adjustment.

“They need not worry because as long as they do not use diesel, they will not be affected and commercial users will still have access to subsidised diesel,” he said.

Last Tuesday, Anwar said the government would implement targeted fuel subsidies for Peninsular Malaysia, with expected savings of around RM4 billion a year.

He said the move would only affect the rich and foreigners who have also been enjoying the subsidy.

However, the targeting does not involve users in Sabah and Sarawak.

Anwar added that diesel subsidies will continue for 10 types of public transportation vehicles including buses, taxis and 23 goods transport vehicles in order to curb the sudden increase in the price of goods and services.

Starting yesterday, owners of diesel vehicles in Peninsular Malaysia from the B40 and M40 groups were eligible to apply for subsidies through the Budi Madani scheme, while small farmers and smallholders can apply under the Budi Agri-Commodity category.

Eligible beneficiaries will receive RM200 per month as a targeted diesel subsidy.

Traders mustn't take advantage

Universiti Sains dan Teknologi Malaysia economist Barjoyai Bardai conceded that the withdrawal of the diesel subsidy carried the risk of an increase in the price of goods.

According to him, it is due to the attitude of a few traders who like to take the opportunity to raise prices even though they are not directly affected.

“I think the price of basic goods will not go up (prices), but the price of food will go up, especially the price of food (in shops and restaurants).

“The government needs to be prepared because in Malaysia, there is a trend of sellers taking the opportunity to increase prices and they will continue to increase prices even if they are not affected (by the increase),” he said.

Therefore, he said, this matter needs to be controlled by the Domestic Trade and Cost of Living Ministry to ensure that unjustified price hikes do not become widespread.

Barjoyai also asked consumers to be vigilant and boycott traders who raise prices at will.

“Consumers can ask why (the increase) and if it doesn’t add up, we can boycott. We have had previous experience with boycotting (Israel) and so on,” he added.

Bank Muamalat Malaysia Berhad chief economic analyst Mohd Afzanizam Abdul Rashid agrees that traders who want to take advantage of the retargeting of the diesel subsidy should be cautioned.

He said apart from the power of boycotts, consumers also have many options to spend such as shopping online.

“We have seen the power of consumers in determining the ups and downs of a business through boycott actions.

“For traders, raising prices immediately will only be effective in the short term. But it should be remembered that information is at the consumers’ fingertips and they have many options with the advancement of technology,” he said.

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