Govt must raise livelihood of the people


  • Business
  • Thursday, 17 Jul 2008

THE debate between PKR adviser Datuk Seri Anwar Ibrahim and Information Minister Datuk Ahmad Shabery Cheek yesterday highlighted the plight both the people and the Government are going through.

The historic “Today we form the Government, tomorrow the fuel prices will go down” debate focused on the debilitating impact high oil prices has on people and government coffers.

The points brought up by Anwar and Shabery show the contrasting stance and choices before the Government and its people.

Both speakers put forth their arguments with Anwar voicing the fiscal strain on the man in the street since the hike in petrol prices, and Shabery saying why the tough decision of cutting the oil subsidy had to be made for the future of the country.

It was a subject that is, in essence, too partisan.

And for an economy like Malaysia, the fact people are now feeling a severe pinch from high oil - and let us not forget food - prices, may be a symptom of other real challenges that are churning in the background.

Half of Malaysian households earn less RM3,000 a month, which in today's high price environment is a tough pay packet to live on.

One explanation why salaries have been kept low has been the low wage model the country pursued to give employment to the people of the country and to help the economy progress onto the industrialisation path.

Sadly, rumblings among the people now give credence that this wage model may have outlived its usefulness, especially in these high price days.

Something has to be done by the Government to raise the livelihood of Malaysians beyond the promise of employment.

For the Government, subsidies are part of its arsenal in maintaining a low-cost environment for its citizens and businesses to operate in. But soaring global oil prices have capped the limit of government coffers and escalating prices in food and other materials meant that the Government too had tough decisions to make.

Choices had to be made as the cost of pursuing projects under the Ninth Malaysia Plan has soared along with the prices of steel and cement.

The fact that the development budget had to be raised and projects streamlined show how much costlier running a Government has become.

Maintaining the oil subsidy will cost the Government dearly and, although the Government can afford to maintain subsidies with Malaysia being an net oil exporter, it can only do so for a limited amount of time as the country does not have huge oil and gas reserves.

To put this in perspective, if every Malaysian consumes 200 litres of fuel a month, the reserves will last us for the next 13 years.

Given that the country expects to pump oil for the next 22 years, something has to be done now to utilise the money for productive purposes, meaning putting into place measures that will lead to greater economic prosperity down the road.

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