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The 30 cents Price Increase In Petroleum Products Is Not In The National Interest By Burdening The People And Make 2006 The Year Of Inflation Without Allowing The People To Benefit From The RM 7.41 Billion In Subsidies Saved.

Media Statement
by Lim Guan Eng

(Melaka, Tuesday): DAP strongly condemns the 30 cents increase in the price of all petroleum products, increasing diesel price by 23% to RM 1.58 per liter and petrol price by 19% to RM 1.92 per liter in Peninsula Malaysia, as highly irresponsible and uncaring of the financial burdens of Malaysians including wage earners, low-income groups and small-time businessmen. With petrol prices and inflation rising, how are wage-earners going to cope when their salaries do not go up?

DAP rejects as ridiculous and unreliable the explanation by the Prime Minister’s Office that the financial savings from the increase in the price of petroleum products would be used to finance development projects and improve the public transport system for the benefit of the people. Clearly the 30 cents price increase in petroleum products is not in the national interest by burdening the people and make 2006 the year of inflation without allowing the people to benefit from the RM 7.41 billion subsidies saved in the form of development projects and improvements in public transportation.


The explanation added that the government lost a total of RM15.26 billion last year from subsidies borne by the government of RM7.41 billion and sales tax exemption of RM7.85 billion. Clearly the latest 30 cents increase would cover all the subsidies borne by the government of RM 7.41 billion. Are people going believe the Prime Minister’s Office explanation that the RM 7.41 billion saved would be used to finance development projects and improve the transportation system?


If so, what happened to the billions of ringgit saved over the last two years when the price of diesel and petrol was increased by nearly 50%? DAP did not see the billions of ringgit saved to finance development projects or that the transportation system. Instead of enjoying the billions of ringgit saved, the people had to shoulder the increasing burden themselves and watch the billions of ringgit of subsidies saved two years ago from the fuel price increases wasted on corruption and wastage.


Clear examples of mismanagement, negligence and wastage of public funds are the recent massive flood in Shah Alam when Sungai Damansara burst its banks caused by extensive logging in Bukit Cahaya and negligence and failure of government authorities to perform, failed public works projects such as MRR2 in Kepong or Matrade Building or wasted in expensive overseas junket trips by local councilors to makan angin. Clearly the Prime Minister’s explanation that the RM 7.41 billion saved from the present price increase would be used for the people’s benefit has no credibility and is an exercise in self-deception to “bluff not only oneself but also others”.


Why Increase Petroleum Products By 30 Cents When The International Price Of Crude Oil Has Dropped By US$2 Per Barrel To US $61.

Furthermore, why should the government increase the price of petroleum by 20% or 30 cents per liter when the international price of crude oil has dropped by US$2 per barrel of 2% yesterday to US$61? Normally petroleum prices are increase when the price of crude oil is increasing but the government must justify its case for doing so when the price of crude oil is going down.


This gives rise to question about the role of the government between the interests of petroleum companies such as Petronas and the people. With the price increase, the role of Petronas and how it utilized its profits for the benefit of the people are important questions. DAP reiterates our stand that as Petronas is owned by the people of Malaysia, Malaysians have a right to enjoy and benefit from our resources and Petronas oil revenue.


The government claims that petrol prices in Malaysia are cheaper than our neigbouring countries and that without the subsidy and tax exemption, the price of petrol would be at RM2.46 per litre for petrol and RM1.98 per litre for diesel. Malaysia even claims to lose up to RM 750 million from smuggling of cheaper Malaysian fuel to neighbouring countries.


With the latest price increase to RM 1.92 per liter and RM 1.58 per liter, the difference is not far off. DAP proposes that the government allows the price of petroleum products to increase to its market price provided that Petronas distributes its profits to the people. Such an approach would have three-fold benefits by not creating market distortion in the actual prices of our products, improve efficiency and cut down losses due smuggling of our cheaper fuel overseas.


Petronas profits of at least RM 35.5 billion for the 2004-2005 financial year would allow every Malaysian to take home at least RM 1,500 per annum. This RM 35.5 billion in profits does not include the RM 31.2 billion paid to the government in the form of taxes, duties and royalty payments. For the latest financial year 2005-2006, Petronas is expected to increase its profits to nearly RM 50 billion, allowing each and every Malaysian nearly RM2,000/- each. DAP believes that Malaysians would prefer to have a share in Petronas profits than to see tens of billions of ringgit wasted on corruption and abuse of power.


DAP also express regrets at the secretive and surreptitious manner the price increase was announced at 10.30 pm to prevent motorists from queuing up pump petrol before the price increase. The government’s management of the economy should generate trust that it is in the interests and benefit of the people. Such a secretive approach does not inspire confidence and trust in the government handling of the economy for their benefit but create suspicion that it is more interested in allowing the petroleum companies to enjoy the price increase.


DAP calls for a distribution of Petronas profits to the people to reduce the financial burden of the people, especially wage-earners who face a higher cost of living from the fuel price increase and inflation that is certain to follow. If the government is not willing to allow an increase in salaries to help them reduce their living expenses and financial burden then, distributing Petronas profits is only fair as it is the right of the people to partake and enjoy in our natural resources.


* Lim Guan Eng,  DAP Secretary General

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