I refer to the Malaysiakini report Mass anti-fuel hike rally on July 12 .
The chickens are coming home to roost; a phrase immortalised by Jeremiah Wright in his remark about White American imperialism can be similarly use to describe the events that have come to transpire in Malaysia. Anwar used the phrase himself when he said that the increase in fuel prices were ‘wanton in size and callous in effect’.
There is no clearer description that warrants mention. Anwar meant to say that the economically unsustainable practice of subsiding oil was going to hamper the country harder the longer that it is in place. This is because once subsidies become unsustainable in the long run, any corrective measure will encompass the compound effects of the many years that the subsidies have been in practice.
In our case, the knee-jerk reaction by BN to remove subsidies in the face of escalating oil prices by August will be felt by the people most vulnerable ie. you and me in the street. While one can understand the hardship that will necessarily follow from this, what Ong Kian Ming and Oon Yeoh have discussed in their recent piece is also equally true ie. the price of oil cannot be continually subsidised in the long run.
We could have had it much better. The present government did not have to be prescient about oil price movements; they just needed to have a solid plan for moving the country forward without putting paralysing reliance on oil.
One can readily observe the astute empires of some Middle Eastern states in recognition of this fact. Even if those nations are blessed with abundant resources of oil, they hardly rest on these laurels. They have set up powerful and immensely influential sovereign wealth funds that channel income derived from exporting oil into a vehicle that they use to invest overseas in recognition of the undeniable fact that while their oil fields are vast, they are however not inexhaustible.
Arguments comparing our fuel prices with both exporting and importing nations run counter to the reality that although Malaysia is technically an exporter, we are not in the same fortunate position as the said states because we are projected to run out of oil by 2014.
Comparing our prices with Middle Eastern nations serve only as estimation; that although we are more expensive than many oil exporters, we are not in the same position to offer equal or lower prices by virtue of our significantly smaller resource.
And it is precisely because of this that Malaysia should have had a contingency plan for when our oil run out - not reacting by removing subsidies in a matter of months to detriment of the population.
Malaysia’s path under BN is - for a lack of a more appropriate word-, ‘unorthodox’. We squandered our national income on irrefutably stupid investments like sending astronauts into space, buying submarines, splurging on needless aircraft and infrastructure that are not income-producing.
Our public transportation system is a derelict in comparison with some of our closer neighbours. So when the reality hits - that the price of oil has risen to the extent that subsidies have become economically unsustainable - BN decides to remove subsidies without adequate measures to address the fallout from such an action this late into the century.
The subsidies themselves would have been an economic constraint the longer that they are in place and would have been removed sooner or later. Subsidies result in economic distortions and the use of national reserves for an economically unproductive venture ie, nothing is produced from those billions.
In our case, the subsidy removal should have been much earlier and phased out gradually so that average income could match the rise proportionally. Ideally, our national income should have been put into good investments - not into building race tracks. What good are a few races a year when compared to the improvement of our LRT system that is used by everyday citizens?
If our socio-economy is unable to comprehend a full removal of subsidy, better use of national income from oil exports would be an additional resource to complement the subsidy by the government. If that were on the agenda, the rakyat would not be suffering as much hardship as it likely would in the near future.
Anwar has continually promised to reduce the price of oil if Pakatan Rakyat ascends to federal government but it is difficult to see how this can be carried out with the weak state of the country after its ruinous run under the Abdullah administration. We cannot simply remove subsidies with a simple announcement because most of the population does not have the adequate income to comprehend and absorb the massive increase in prices.
There has to be gradual phasing out because of the compound effects from the many years of subsidies - that while oil prices increase (and subsidised then by the government), wages and salaries are not rising even comparably.
BN is attempting to correct itself by subjecting the rakyat to the economic conditions of an absence of subsidies but what it has to understand is that the average wages and salaries do not reflect this. It never can because the subsidies have been in place ad infinitum so a complete removal in months is wholly inappropriate.
So instead the rakyat had to suffer fools the likes of our Najib Razak who assured us that the government will not increase the price pre-election. What this show was not that Najib is a liar – well, ‘technically’ yes- but that, in fact, BN had such a tidak apa approach to economic stewardship of the country and no contingent strategies in the face of a weakening global economy.
As per usual, they only react to situations with aggressive tendencies by cutting without consulting. And indeed for the one credible thing (in concept not method) that Abdullah has done, that in one fell swoop, he might render the downfall of BN once and for all.
An ironic twist of events one might say. I would end this letter by commenting on the incredulous and unimaginable state the country will be in if Najib became PM. That outcome is itself laughable without the need of a punch line. Ha! Ha!
