Media Statement
by Lim Guan Eng

(Petaling Jaya, Friday): The 30 cents price hike in all petroleum products is expected to unleash RM 4.4 billion savomgs of fuel subsidies into our economy. However, DAP fears that non-performing GLCs such as MAS will profit more from the RM4.4 billion in fuel subsidies savings than ordinary Malaysians. This is reflected in the 9 point drop in the KLSE Composite Index since the fuel price hike was announced 2 days ago as compared to generally stronger performances by other regional share markets.

Both the Prime Minister and his Deputy’s explanations have been disappointing in that they were unable to justify the rationale for the fuel hike. The most important 2 questions are the necessity of paying such high fuel prices when we are an oil exporter and whether the burden and benefits from the fuel hike will be equally shared amongst all Malaysians or mostly on the poor and lower income groups.

Deputy Prime Minister Datuk Seri Najib Tun Razak tried to explain that Malaysians have to pay a higher fuel price even though we are a net oil exporter because the country's net production rate was only about 75,000 barrels per day because oil production has stagnated at 650,000 barrels but consumption continues to rise. He added that Petronas President Tan Sri Mohd Hassan Marican predicts that Malaysia will be an oil importer in 4 years time by 2010. So fuel prices have to rise so as not to burden future generations but Najib assured the public that our fuel is still cheaper than neighbouring countries except Brunei.

There is a fallacy in this argument in that Najib does not want to compare fuel prices with oil exporters like Brunei but only oil importers like Singapore, Thailand and Indonesia who are forced to pay higher fuel prices. If Malaysia was to compare our fuel prices with other oil importers, our fuel prices are amongst the highest.

Further, if oil runs out by 2010, there is greater urgency to let fuel price to find its real market level of RM 2.46 per liter so that we are prepared for the day when we have to import our oil needs at US$65 per barrel. Removal of subsidies prevents market distortion in the actual prices of our products, improve efficiency, cut down losses due smuggling of our cheaper fuel overseas as well as forces the economy to be more competitive and Malaysian workers more productive.

However such removal of subsidies carries a large social cost to the poor. To alleviate the high cost of living faced by the people, especially wage earners and lower income groups, Petronas huge profits of RM 35.5 billion should be shared with Malaysians. 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.

Instead of giving to every Malaysian, such profits should be given only to the needy ones. 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. The RM 31.2 billion can be used by the government to fund Petronas investment requirements. 

For the past 31 years since Petronas was formed, Petronas has earned profits and contributed to the government coffers nearly RM 500 billion. A good question to ask is whether the people have enjoyed a share of this RM 500 billion profits or that only a small number of top leaders who practiced cronyism, corruption and rent-seeking are the real benefactors.

The time has come for 25 million Malaysians to benefit directly from this oil revenue. We have been denied our rightful share for the last 31 years and it is only fair that Malaysians can partake in the final four years left in oil revenues before we become an oil importer by 2010. 

This goes to our second question whether the people would really benefit from the improvement in transportation system or development projects from the RM 4.4 billion savings in fuel subsidies. When the fuel price was increased form RM 1.37 to RM 1.92 per liter for petrol and RM0.78 to RM1.58 per liter for diesel since May 2004, billions of ringgit were saved in fuel subsidies. However the people did not see any benefit from development projects or improvement in public transport.

That is why DAP believes that the poor and wage-earners will bear the burden of this increase. So far neither the Prime Minister, nor his deputy or Ministers have responded to my challenge that they start using public transport to show that they are willing to change their lifestyle and suffer together with the people. Such hypocrisy and double-standards have led the people to demand a share in Petronas RM35.5 billion yearly profits than to see tens of billions of ringgit wasted on corruption and abuse of power.

With these profits allowing every wage-earner and poor Malaysian RM 1,000-2,000, the people will not fear any price increase up to RM 2.46 per liter. If the government is not willing to allow an increase in salaries to help them reduce their living expenses and financial burden following the fuel hike, then distributing Petronas profits is only fair as it is the right of the people to partake and enjoy in our natural resources.

(03/03/2006)