The impact of a fuel price rise

The Goldman Sachs group analyses that Malaysia's consumer price index may shoot up to 7% this month. Bank Negara estimates inflation could go up as high as 4.2% this year, while other financial institutions in Malaysia make estimations of inflation from 4-plus percent to a near 6 percent for the whole of 2008.

Immediate impact of the fuel price increase:

* Transporters and fowarders plans to increase service charges by 35% (price of diesel has increased from RM1.58 to RM2.58);

* Electricity rates increases by an average of 18%-26% for commercial and industrial consumers depending on usage; whilst the model of charging is peculiar for households. They pay the same rates (no change) provided usage is maintained at the same level;

* Price of gas will increase by 187% on 1st July 2008 as announced by Petronas;

* KLCI falls like crazy at the point of writing- a 27 point downwards. Plantation and bank counters are bears today.

* Further impact- who knows- higher crime rate, higher food prices, slowdown in local tourism industry, higher lending rates to be imposed by Bank Negara, increase in non-performing loans and so on;

* By the way, the ceiling price of RM6 per kg of chicken is also removed.

Mitigation to the 41% fuel price hike:

* Rebate for car owners- RM625 for car owners less 2000cc (for trucks and jeeps the threshold is 2,500cc) in capacity;

* Possible reduction in road tax, an initiative currently being studied.

If you have noticed from the facts above, the negative impact is net of all positive measures and to my personal estimation will reduce the average salaried worker's disposable income by at least 30% (the accuracy of this estimate is of course reserved, given the wide range of salaries and spending habits of Malaysians). The worst part is... this is just the start of the planned increases of up to a very possible RM4 per liter by August 2008.

As we know, the only company making profit out of this situation in this country is Petronas. Given the nature of the confidentiality of its company accounts, one can only suspect the amount of 'consultancy fees' expensed out in Petronas' profit and loss accounts. One can only speculate the beneficiaries of such 'consultancy fees' and various forms of funds channelled out of Petronas' bank accounts. It is in the interest of Malaysian citizens that Petronas' external/ internal auditors are changed and replaced; and its audit reports, financial statements and other notes to its accounts be made public.

I urge the MPs to fight for this right.


  1. Can the writer elaborate a bit on what are the solutions to be taken the malaysians in partically residents in wangsa maju to over come this matter? I note that the debate session in Parliament to solve this problem might take some time. But at the mean time people in wangsa maju need to carry on their living. so is there any suggestion?

  2. Selamat hari Resident Wangsa Maju,

    Sorry about the long delay as I was on medical leave.

    Thanks for leaving a comment in my blog post Will start to approve and respond to comments soon and for words of comfort.

    Jumpa Lagi,

    Peter Chen the only Malaysian Blog*Star
    Guide to Malaysia

  3. Hi Peter- glad you are back in action. You are the only person I know who can leave hyper links in a comment box! Cool.

  4. medklinn, I don't have long term solutions that we can adopt. The petrol price is just overwhelming. I can't stomach the thought of eating less, driving slower and giving up other necessities (not luxuries) for the cause of the few who are robbing our federal coffers.

    This Malaysian Government no different from the Nazis and other oppressive governments- using excessive police force and every government agency to suppress its citizens. The only solution is to support every move by the people to change governments. I'm tired of these crap dished out by BN- every day there's something new to pin the rakyat down.

    By the way check out this piece of news in Wee Choo Keong's blog-