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Fuel Price Hike Responsible Decision, Says Najib

KUALA LUMPUR, March 1 (Bernama) - The decision to raise fuel prices, though disapproved by the people, had to be made to stabilise the country's financial management system, Datuk Seri Najib Tun Razak said. The Deputy Prime Minister said the government realised that by adopting the decision it would become unpopular but it opted to be a responsible government. "Although we are elected by the people, we need to be a responsible government that makes decisions in the interests of the people and country and future generations, and not based merely on political interests," said Najib when speaking on the "Isu Semasa Khas Bersama YAB Timbalan Perdana Menteri" programme. The programme, aired over RTM's TV1, was televised live by all local television stations, radio networks and pay TV station Astro. In the 40-minute programme, Najib, who is also Chairman of the Cabinet Committee on Fuel, was interviewed by Bernama Editor-in-Chief Datuk Azman Ujang, with Imran Imtiaz Yaacob as the moderator.

The special programme was aired to explain to the people the justification in the government's decision to raise by 30 sen the prices of petrol and petroleum products effective on Tuesday. Najib said the move was in line with the government's intention to implement prudent spending, good governance and far-sightedness leading to a stable financial system. "When the prime minister tables the Ninth Malaysia Plan on March 31, and analysts look at the figures, they will find that the biggest amounts are subsidies. So, what is the conclusion? They will see Malaysia adopting a macro fiscal policy that is not prudent, not practising good governance and not in accordance with a stable financial system. This does not reflect well on our efficiency," he said. The deputy prime minister said that if subsidies were not reduced, they would create a situation whereby the allocations for subsidies exceeded the development allocations for the ministries. Najib said it was important for the people to understand and accept the fact that a hike in fuel prices was inevitable following an increase in the world crude oil price.

Since last year, the crude oil price has continued to surge until US$62 per barrel now and is expected to remain at a high level, he said. He said that since July last year, the government had not raised fuel prices though crude oil price continued to escalate until yesterday when the government could no longer absorb the very high cost of subsidy tax exemptions. Najib said, however, that in deciding to raise the retail fuel prices, the government adopted a considerate stand and maintained the price at a level among the lowest in the world and in the Southeast Asian region, except Brunei Darussalam. Asked why the increase was not implemented in stages, the deputy prime minister explained that the periodic three-time increase last year actually amounted to a far higher 45 sen overall compared to only 30 sen once for this year. Najib gave the assurance that fuel prices would not be raised anymore this year even though the world crude oil price continues to rise. "This is good because people will have a sense of certainty, especially those in business, in terms of preparing the budget and costing," he said. He explained that the savings from the subsidy reduction would be used for development, especially to improve the public transportation system. He said the Cabinet today agreed to set up a committee chaired by Prime Minister Datuk Seri Abdullah Ahmad Badawi and himself as deputy chairman to plan the development of the public transportation sector.

"The revenue saved from the subsidy will be deposited into a trust fund to be set up. The fund will be used to improve the public transportation system in the country," he said. On the assumption that it was inappropriate for Malaysia to raise fuel prices as it was an oil exporting nation, Najib explained that the country's production rate was only about 75,000 barrels per day after taking into account the volume exported and imported. "Our net figure is only 75,000 barrels per day because our oil production has stagnated at 650,000 barrels but consumption continues to rise. "So, the gap has narrowed. When the gap narrows further (and as for) the position in a few more years I asked Petronas President (Tan Sri Mohd Hassan Marican) (on the matter) further, (and) he said, maybe by 2010, meaning in the next four years, if this trend continues, we will become a net importer. This means that if we did not take this step today, the generations to come bear the burden. On the diesel subsidy for fishermen, Najib explained that the main reason for the failure of the subsidy programme was the subsidy actually benefited the parties which were not eligible to receive it. This situation, he said, was reflected through a decline in the total catch from 1.29 billion tonnes in 2002 whilst the diesel supply rose sharply from 326 litres in 2002 to 1.2 billion litres in 2005. "How can the diesel used increase three-fold when the total catch declines just a little? It does not make sense ... meaning there was sale (of diesel) to people who did not deserve the subsidised diesel," he said.

In facing rising costs, Najib advised the people to adjust their lifestyle by spending prudently, being thrifty, setting spending priorities and curbing wastage as espoused by religions. He said the people should also consider making changes to their lifestyle, like using public transport. "If we can accept the reality (that fuel price hike cannot be avoided), it will be easier for us to make adjustments to adapt ourselves," he said. To the notion that public transport was for the poor, the deputy prime minister said such an assumption was not true because in advanced countries use of public transport was a normal practice. "I know there are also ministers who take the LRT (Light Rail Transit) to go for functions because it is convenient. (Housing and Local Government Minister) Datuk Seri Ong Ka Ting told me today he had taken the LRT five times as it is more convenient," he added.