Malaysians have remained happy with cheap diesel, petrol, cooking oil, flour, rice, and other food items, but the bill has now gone out of control. — AFP
THIS is obviously poor timing for the head of government of any country since they must all deal with the rising cost of living that has affected people across the globe for the past few years.
Voters in democracies are angry with politicians and have displayed their disillusionment by dismissing their governments.
Although hardly the best option, right wing parties have been voted in across Europe, and Donald Trump potentially getting re-elected in the United States should no longer be shocking.
Daily news reports abound about protests against sharp price increases of food items, new taxes – which in Kenya even included an eventually scrapped bread tax. Rocketing inflation rates are hogging just as many newsbytes.
The World Economic Forum reported that one in four adults in 11 developed countries is struggling with financial issues. In Britain, one in seven adults can’t afford to eat every day.
The sad truth is the Russia-Ukraine War has detrimentally impacted the world as food production and distribution have taken a beating, leading to a global crisis in the cost of living. Ukraine is one of the world’s top agricultural producers and exporters, especially of oilseed and grains.Forbes reported that the rising cost of living remains a prominent concern across the United States with surveys indicating that Americans rank inflation as one of the top problems facing their country. As prices continue to soar in nearly every aspect of life, from groceries to transportation to housing, it seems sticky inflation has a hand in everything.
Closer to home, Singapore is the most expensive city to live in in Asean, and even the world, with a score of 85.9 out of 100 on Numbeo’s Cost of Living Index. It’s on par with Hong Kong and Tokyo.
Unless Malaysians working in Singapore are willing to commute daily from Johor Baru, their hard-earned income will invariably go to expensive rental and basic commodities on the island.
There’s a difference between the cost of living and living standards. Waking up at 4am daily to get ready to cross the Strait of Johor is surely the best option if one has nothing else to choose from.
Living in a tiny flat in HK, Singapore or Tokyo isn’t a high standard of living, but owning a landed property with several rooms, two cars or more, and a maid, in KL or JB, is certainly a good living, even with lower wages.But for many Malaysians living on RM2,000 to RM5,000 in KL with families to feed, it’s a genuine struggle.
Ahead of Budget 2025, Prime Minister Datuk Seri Anwar Ibrahim acknowledged that the rising cost of living is still present and affecting the public, although he said oil, flour and sugar were relatively cheaper.
When Anwar took office as PM in 2022, he announced that his primary focus would be the cost of living and a slowing economy.Anwar’s commitment shouldn’t be doubted, but two years later, it must be apparent to him that it’s not easy dealing with those issues since voters are now displaying their unhappiness towards his Madani government.
For decades, Malaysia’s inflation rate has been kept artificially low because of heavy subsidies from the government.
Malaysians have remained happy with cheap diesel, petrol, cooking oil, flour, rice, and other food items, but the bill has now gone out of control.
The price of diesel has gone up as the government cuts subsidies, which has caused much consternation.
The reality is the subsidy bill alone has risen 10-fold from RM1.4bil in 2019 to RM14.3bil in 2023.The government reduced its subsidy payout last month to save about RM4bil annually, with the savings expected to be redirected to low-income groups.
But I doubt low-income Malaysians who are struggling to put food on the table care for the government’s subsidy rationalisation exercise.
It may be the right thing to do by the Madani government, but not many are going to be convinced.
Of course, Anwar could take the easy way out by allowing the subsidy bill to balloon, but that would do this country a great injustice.
An adjustment in the RON95 subsidy is anticipated in the coming months after the impact of the diesel subsidy cuts has been assessed.Bernama reported that the adjustment was expected to be small, like the retail pricing of diesel fuel, quoting the Malaysian Institute of Economic Research executive director Anthony Dass.
“We need to look at the impact of the diesel subsidy rationalisation, so we probably need to give it a three- to six-month grace period. We need to look at the impact analysis first, and how the people are adjusting. From that, the government can make the next adjustment to the RON 95 [petrol subsidy],” Dass said.
The price adjustment for RON 95 petrol is expected to come into effect “closer to October” as this would give the government more time to look at the impact analysis, he added.
However, the RM8bil in savings from fuel subsidies may only be realised next year, depending on the quantum and duration of the fuel price adjustment. More could also be saved if the RON 95 subsidy rationalisation happens this year, according to a TA Securities report.
We can expect another round of political criticisms with the replay of past populist promises by government leaders to reduce the price of oil after forming the next government.
It’s always easy for politicians to make wild promises when in the Opposition, but reality bites when they’re in government. Talk is cheap, goes the adage.
There are also legacy issues inherited by the Madani government – the government has repaid RM13.3bil of 1MDB’s debt so far.“As at Dec 31, 2021, 1MDB’s outstanding debt, comprising principal and coupons/profit for bonds and Sukuk, amounted to RM38. 81 billion,” said Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz in 2022.
The recovered money from 1MDB is only enough to pay off the principal amount of the debt still owed by the firm this year.
1MDB raised billions of dollars in bonds, ostensibly for investment projects and joint ventures, between 2009 and 2013.
Basically, while billions have been stolen from 1MDB, Malaysia must still settle its debts!
Imagine how much of these billions could have been used to pay our subsidy bills, build schools, hospitals, homes and rail links.
It will not be easy to explain the necessity for subsidy rationalisation, the impact of US Fed interest rates on the ringgit, and the long-haul cost of 1MDB to our economy at ceramahs, yet all of us will have to grin and bear it.
There’s no rosy picture and a miracle isn’t looming either. The government needs to boost its communications strategy urgently as perception is everything in politics. Likewise, communication.
