Prices will only go up 5pct, opines Mahathir
Published: Sep 6, 2013 11:19 AM | Updated: Sep 6, 2013 3:06 PM
The 20 sen per litre fuel subsidy cut will only push prices of goods and services up by an estimated five percent at most, said former prime minister Dr Mahathir Mohamad.
The 20 sen per litre fuel subsidy cut will only push prices of goods and services up by an estimated five percent at most, said former prime minister Dr Mahathir Mohamad.
He said that this is because fuel only make up a small part of costs for producers and businesses.
In fact, he said, fuel is more likely to make up only 10 percent of input for products and services and any fuel price hike can be absorbed by the businesses.
"Ten percent of 10 percent (increase in price of fuel) is one percent. It is a percentage in terms of increase in cost which most businesses can easily absorb. There need not be any increase in prices of their products or services," he said in a posting on his blog today.
While acknowleging that some products and services use more fuel, he said that petrol or diesel are likely to only make up half of production input.
"The increase in cost should therefore not be 50 percent. It should even be 10 percent. It should be five percent or only slightly more," he said.
'Don't be like failed socialist regimes'
Mahathir's comments come after Domestic Trade, Cooperatives and Consumerism Minister Hasan Malek revealed that government research showed that prices should only rise 0.1 percent.
However, a container haulier company told Malaysiakini that it will raise its fuel surcharge by about two percent of the tariff rate, while bus operators said fares will have to go up or else they would fold.
The Real Estate and Housing Development Association also estimates that new homes will cost 10 percent more as building materials would be more expensive due to the diesel subsidy cut.
Mahathir said that any subsidy rollback must be done slowly to allow people time to adjust, but at the same time, Malaysians must accept that prices will increase over time.
He added that at the same time, the government must be prudent in its expenditure and be careful when providing handouts like the 1Malaysia People's Aid (BR1M).
"I notice that some of the BR1M receivers sport new cars and decent houses. If the government wants to give money it should be to the really poor," he said.
He added that failed socialist regimes have shown the folly of continuous handouts that create over-dependence, and brings down productivity and poor revenue for the government.
"Paradoxically it is at the time when people are not productive and revenues are low that the government needs to dole out more BR1M and subsidies," he said.
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He said that this is because fuel only make up a small part of costs for producers and businesses.
In fact, he said, fuel is more likely to make up only 10 percent of input for products and services and any fuel price hike can be absorbed by the businesses.
"Ten percent of 10 percent (increase in price of fuel) is one percent. It is a percentage in terms of increase in cost which most businesses can easily absorb. There need not be any increase in prices of their products or services," he said in a posting on his blog today.
While acknowleging that some products and services use more fuel, he said that petrol or diesel are likely to only make up half of production input.
"The increase in cost should therefore not be 50 percent. It should even be 10 percent. It should be five percent or only slightly more," he said.
'Don't be like failed socialist regimes'
Mahathir's comments come after Domestic Trade, Cooperatives and Consumerism Minister Hasan Malek revealed that government research showed that prices should only rise 0.1 percent.
However, a container haulier company told Malaysiakini that it will raise its fuel surcharge by about two percent of the tariff rate, while bus operators said fares will have to go up or else they would fold.
The Real Estate and Housing Development Association also estimates that new homes will cost 10 percent more as building materials would be more expensive due to the diesel subsidy cut.
Mahathir said that any subsidy rollback must be done slowly to allow people time to adjust, but at the same time, Malaysians must accept that prices will increase over time.
He added that at the same time, the government must be prudent in its expenditure and be careful when providing handouts like the 1Malaysia People's Aid (BR1M).
"I notice that some of the BR1M receivers sport new cars and decent houses. If the government wants to give money it should be to the really poor," he said.
He added that failed socialist regimes have shown the folly of continuous handouts that create over-dependence, and brings down productivity and poor revenue for the government.
"Paradoxically it is at the time when people are not productive and revenues are low that the government needs to dole out more BR1M and subsidies," he said.
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Prices will only go up 5pct, opines Mahathir
Ku Li: Get rid of graft if you want to help rakyat
Perkasa: Cut top civil servants' pay, close Pemandu
Group: Reintroducing RON92 a backward move
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