Saturday, July 17, 2010

Koh Tsu Koon Lives in Parallel Dimension?

The Government yesterday launched a surprise “5-in-1” price hike programme, raising the prices of RON95 and RON97 petrol, diesel, white sugar and liquified petroluem gas (LPG) including cooking gas cyclinders by at least 2.8% and as much as 15.2%. In fact for white sugar prices, inclusive of a 20 sen hike in January on top of the current 25 sen hike, prices have increased by more than 31% this year alone.

It is hence shocking to hear the Prime Minister, Datuk Seri Najib Abdul Razak, supported by the Performance & Management Delivery Unit (Pemandu) claim in their subsidy rationalisation fact sheet that the price increases will have “minimal impact” on households in Malaysia.

In the fact sheet, it's “demonstrated” that the new teh tarik price taking into the impact of subsidy reduction of fuel and upward price adjustment would be around RM1.0155, or an increase of less than 2 sen.

The impact on other popular items such as roti canai was stated as being 0.24 sen per piece, 0.6 sen for rice, 6.3 sen for meat per kg and 1.05 sen for mee goreng.

Pemandu under the chairmanship of the Minister in Prime Minister's Department Senator Tan Sri Koh Tsu Koon must be living in a parallel universe for having the audacity to publish such numbers which are at best applicable only in a fictitious and theoretical universe, and at worse, showing the complete lack of understanding of real world market dynamics on the price of goods and services.

I challenge Tan Sri Koh Tsu Koon to find me a mamak stall in Malaysia which will increase the price of teh tarik by a mere 1.55 sen or the price of roti canai by a minute 0.24 sen in the entire country to prove the “minimal impact” of the latest round of 5-in-1 price increase.

Even anecdotal evidence of the previous price hikes have clearly demonstrated that prices will increase by a percentage much larger than the theoretical impact of the price hikes because of an real-world imperfect market. What's more, when the prices of fuel actually decreased subsequently, the inflated prices never returned to its previous levels.

The government should instead stop spewing these ridiculous and out-of-these-world hypothetical data but instead demonstrate how the Government will not only seek to trim the subsidies which affects the rakyat directly, but also the wasteful expenditure and subsidies to crony companies as well as clamping down on corruption which will have a much larger impact on government finances.
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