Fuel price to be reduced as well as hypermarkets this week

KUALA LUMPUR, Oct 28 — Malaysia is set to cut fuel prices again this week, while hypermarkets will slash prices as the government attempts to calm public anger over the soaring cost of living.

But while fuel prices will fall for the fourth time in as many months, the price of electricity, which rose by 12 per cent in June despite loud protests, will not be brought down.

The government has been facing pressure to lower fuel prices since raising them by an unprecedented 41 per cent in June, a move which had the knock-on effect of pushing up the general price of goods and services.

A litre of unleaded fuel was raised by 78 sen to RM2.70 in June, but the sharp fall in global crude prices — from around US$147 a barrel in July to around US$62 today — has allowed officials to reduce pump prices.

Prices were cut by 15 sen in August, 10 sen last month, and then 15 sen in the middle of this month, with the price of unleaded 97-octane fuel now at RM2.30 a litre.

Domestic Trade Minister Datuk Shahrir Samad said he expects the latest reduction to be no more than 15 sen a litre.

Officials say the moves to cut the prices of fuel and goods are aimed at easing inflation, which hit a 26-year-high of 8.5 per cent in August and remained at a still-painful 8.2 per cent last month.

But an economist at Bank Islam, Azrul Azwar, told The Straits Times that the government was being too cautious in its fuel price cuts.

“The main issue is that prices of other goods and services, like food, are taking their time to fall,” he said, adding that the best way to solve that would be to slash the cost of fuel by 50 to 70 sen.

“That should trigger a chain reaction among traders, producers and manufacturers to reduce their prices. Baby steps will not improve the situation,” he said.

There is a bright spot on the horizon for consumers feeling the effect of high prices, however, as hypermarkets are expected to slash the prices of products ranging from fruit to chicken this week, following meetings with government officials.

Mydin Hypermarkets, a big local player, will cut the prices of 300 to 500 items by up to a third from today, its managing director Ameer Mydin was quoted as saying in The Star newspaper. “Hopefully, others will follow suit,” he said.

But while the move will almost certainly be welcomed by struggling shoppers, many complain that it does not go far enough, after everyone from high-end boutiques to food hawkers raised their prices following June's fuel price hike.

One consumer, Dr Tan Eng Bee, complained in a letter to a local newspaper last week that high prices “speak of the greedy attitude of our business community who are extremely quick to increase their prices but are adamantly slow to react when the price of fuel is lowered”.

And Mrs Chen Lee, a 40-year-old housewife, told The Straits Times: “My favourite claypot chicken rice is so expensive now at RM5.80 for a bowl, and there is so much rice in it now and not as much chicken. I hope to see it go back down to around RM4.50.”

But whether or not Malaysians see a general fall in the cost of living, they appear to be stuck with paying more for electricity.

Energy, Water and Communications Minister Shaziman Abu Mansor said tariffs will not be cut as the bulk of the electricity supply is generated using gas and coal.

Meanwhile, with Malaysia also starting to feel the effects of the global financial crisis, Finance Minister Datuk Najib Razak is expected to announce an economic stimulus package next week, and reduce the growth forecast for next year from 5 per cent to around 3 per cent. — Straits Times

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Alternative Budget 2009 unveiled by PR

Pakatan Rakyat today unveiled what is seen to be their ‘alternative budget’ containing a wide range of promises and recommendations specifically to tackle the current global economic crisis.

The 20-page statement titled ‘Facing economic challenges and rebuilding confidence’ was read out by Opposition Leader Anwar Ibrahim at a press conference in Parliament this morning.

Also present were several Pakatan MPs, including DAP supremo Lim Kit Siang and PAS secretary-general Kamaruddin Jaffar.

Anwar told reporters that the Budget 2009 tabled on Aug 29 by Prime Minister Abdullah Ahmad Badawi, in his capacity as finance minister then, was “deeply flawed”. Deputy Prime Minister Najib Abdul Razak took over the finance portfolio later.

The nation’s leaders seem to be on auto-pilot, unaware of the challenges which have already risen in the form of runaway inflation, rising unemployment and declining foreign investment.

“More troubling is their prolonged state of denial over the grim economic forecasts,” Anwar said.

Re-engineering the growth strategies

He explained that Pakatan’s various recommendations were therefore made in the light of the global economic and financial crisis, the sharp decline in commodities markets and the anticipated impact of these factors on the Malaysian economy.

To address this, Anwar said the broad thrust of the policy would be directed at re-engineering the growth strategies for the immediate and long term and to address the vulnerabilities in the economy.

He proposed the four main strategies to be ensuring the stability of financial markets; enhancing provisions for the social safety net; maintaining domestic price stability and enhancing national competitiveness.

Some of the key recommendations - such as the auction of approved permits and the reforms of public tender system - have been made by the opposition leader in a 11–page economic policy paper last month in response to Budget 2009.

Although the recommendations made by the opposition alliance was similar to its alternative budget in previous years, Anwar and Lim nevertheless denied the document released today was Pakatan’s alternative budget.

They said this when asked why Pakatan only chose to unveil the recommendations today - the last day for the debate on Budget 2009 in Parliament.

“We don’t call it alternative budget. This is our plan in order to meet the crisis of confidence on the economical front and we give various specific measures addressing specific problems facing the country,”explained Lim.

The salient points

The salient points from the measures proposed by Pakatan today include:

* Pakatan anticipates a decrease in government’s revenue by 11 percent to approximately RM157 billion as against the government’s projection of RM176 billion due to the drop in commodity prices as well as a decline in GDP.

* Suggestion for a 15.5 percent reduction in government’s operational expenditure to RM130 billion, as opposed to the government’s proposed amount of RM154 billion. In reducing operating expenditure, Pakatan assures it will however make no reduction in government salaries.

* Pakatan believes that a RM10 billion substantial savings is feasible simply by reducing corruption and mandating open-tenders for government procurement.

* Pakatan believes the budget deficit to be 3.0 percent, down from the estimated 3.6 percent for 2009, based on the revised calculation of revenue and allocation for expenditure.

* Education, public transportation, health and housing were chosen as the four areas to be benefit from substantial increases in development expenditure. The allocation for education to be increased from RM8.4 billion to RM11.8 billion in 2009, RM3 billion for housing development as opposed to the government’s RM1.4 billion and RM3.5 billion for improving security.

* Set up the Independent Police Complaints and Misconduct Commission (IPCMC) and re-allocate approximately 30 percent of the police officers from administrative departments to crime-fighting.

* The approved permits for imported vehicles are suggested to be auctioned to highest bidders in order to generate an estimated additional RM1.75 billion to government’s coffers.

* Renegotiation of “exploitative contracts” in toll concessionaires and the independent power producers for a lower cost of services to all Malaysians and savings for the government.

* A temporary reduction in employee contributions to the EPF from 11 percent to nine percent for a period of one year to increase disposable incomes. This would inject nearly RM2 billion of disposable income into the economy for domestic spending.

* Liberalising taxes and import duties on inputs used for the production of food, final goods and farming.

* The formation of a pricing mechanism which is more responsive to fluctuations in market price for crude oil.

* The enactment of a national competitiveness policy and take steps to reduce the “unfair market power” held by state-created monopolies”.

* To revitalise the SMEs sector, it is proposed that the tax rate for SMEs on their first RM500,000 chargeable income be reduced to 18 percent from the current 20 percent. A new partial tax exemption threshold is also proposed and to set at RM200,000 and taxed at 12 percent.

* A review for mega project costing more than RM1 billion to assess their socio-economic viability, affordability and intended impact on national development and employment.

* All government contracts to go through public tender. A saving of at least RM5 billion per annum is estimated to be achieved from this.

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Public mega projects would be reviewed - PM

UALA LUMPUR, Oct 15 — Prime Minister Datuk Seri Abdullah Badawi said certain major government projects, including those in the economic corridors, may be reviewed due to the global financial crisis.

He did not name any of the projects facing a review.

“Decisions have been made to continue with certain projects, but for projects that are yet to commence, action may be taken to postpone them, if necessary, but only the big projects,” Abdullah told reporters today.

He added that the review includes the various economic corridors throughout the country.

Abdullah also said the government will introduce certain measures to mitigate the affect of the global financial crisis. He insisted that the Malaysian economy remains strong.

On the announcement to reduce pump prices today, he said that the government needs to be responsive to fluctuating oil prices.

He said that the business community and the consumers should also be able to adapt to the situation.

He hoped that the price of consumer goods would reflect the oil price reduction.

“Don’t just expect the government to do everything, consumers have a big role to play,” he said adding that he was not trying to urge consumers to boycott certain products.

“I’m sure the prices will go down, they don’t have to wait for the government to act. We will act where it is possible,” he added.

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