Domestic Trade and Consumer Affairs Minister Mohd Shafie Apdal claims the government is taking a 'political gamble' by increasing fuel prices by 30 sen this week.

"The government is taking a political gamble [...] if it (crude) oil prices increase, there won't be any savings," he said.

Speaking during a press conference on the government's Diesel Subsidy Fleet Card system for commercial vehicles in Petaling Jaya, he said due to the volatile situation in the Middle East, the attempt to reduce fuel subsidies by the government would be negated should the prices of crude oil escalate any further.

"In 2005, RM15 billion or 10% of the federal budget went towards subsidising fuel and related products. We forecast almost RM20 billion will be spent on such subsidies in 2006 if we don't raise the prices of fuel," he said.

He adds that Malaysia produces 700,000 barrels of oil daily, while domestic consumption requires 500,000 barrels daily with the number is increasing. He warned that as oil reserves dry up, Malaysia may soon become a net oil importer.

Shafie advised consumers to spend prudently and forgo certain luxuries. "Consumers must empower themselves and find cheaper alternatives,".

Marginal effect

He clarified that his ministry not only will monitor the prices of controlled items but also traders across the board for unscrupulously cashing in on the recent fuel price hike.

The minister cited the example of a 'mee rebus' stall owner in Shah Alam who was reprimanded by his ministry for raising prices by 20 sen.

"If traders are found to have raised their prices unreasonably, we have to resort to taking back their licenses," said Shafie.

He revealed his ministry had investigated 36 food manufacturers so far and found that the 30 sen fuel hike had only a marginal effect on their production cost, giving little reason for hawkers and restaurant owners to raise prices.

Members of the public who wish to report indiscriminate price hikes are advised to lodge complaints via the ministry's hotline at 1 800 886 800.