Petrol to be RM2.70/litre

My prediction is slightly off by 2 months. It seems the government took the hard step of increasing fuel prices at pump immediately beginning midnight. Petrol at RM2.70 means the government is still subsidizing the price at around RM0.30-0.50 as of now. Other than that it seems other subsidies such as gas and electricity shall be slowly reduce. I applause the government brave action in pulling back these subsidies. One thing lacking is that rather than a sudden increase in price there should be a clear policy in reducing fuel subsidies within a time frame of 3-5 years and gas subsidies between 7-10 years.

The immediate impact of the increase on the consumer would be psychological in nature. Seeing that we have been content in living with subsidies. The government have to effectively explain to the people on the street why such an increase is essential to save the nation economy. My fear now would be a civil unrest and people taking to the street their dissatisfaction. Already tonight I noticed a certain sense of chaos with people queuing up for fuels. I'm sure there would be pent up frustration and hopefully such feelings can be contained. A civil unrest and riots would be disastrous at such moment. This would be detrimental to the country's peace and economic health.



Cars queuing up for fuel [picture by my lovely wife :)]

By now, people would have started to compare the fuel at pump between oil exporting nation with that of Malaysia, and rest assured that the prices of fuel at these countries can be unimaginably low. But like all things, not all examples are good. The nation that subsidised so much of their oil will eventually have to bear the negative effect in the future. Our children, and their children will eventually live in a world with no natural resources what so ever due to our wastages now.

Let me remind you again that subsidies like the fuel subsidy reduces the efficiency of a market, it will produce wastages by consumer and never actually meet it's economic target of helping the poor.

Rather than looking at the bleak picture, now is the time for us to be more creative in dealing with daily difficulties. We can now focus the savings we made from our subsidies reduction to areas that can be beneficial in the long run. Subsiding health and education seems to be one of a long term solutions that can actually increase not only the quality of life for the citizen but bring about a better society.

On a more personal level, maybe it's time for us to look at a bus map and plan our journey to the office tomorrow. Or maybe we can advertised in our office and find a car pool mates. In a long term solution maybe we can find a place to stay nearer to the office or near public transport routes.

I hope tonight we can take a moment and reflect on this situation and give thanks to God for giving us some common sense to look further in the future to the needs of our next generation.