PETALING JAYA: The drastic hike of diesel prices to RM5.52 per litre will adversely impact consumers, as the sudden increase could trigger a chain reaction across multiple sectors, says Datuk Seri Dr Wee Ka Siong.
The MCA president said the price hike would exert pressure on three to five layers of the supply chain simultaneously, affecting raw materials, operations and the transportation of goods to factories.
Sectors heavily reliant on diesel such as agriculture, construction, logistics and fisheries, would see an immediate surge in operational costs, he said.
"After goods are manufactured, they must be sent to markets and shops. The original cost of diesel was RM3, and now it is RM5.50.
"Businesses cannot absorb all these costs and will pass them on to consumers. When transport costs rise, the prices of goods will rise. This creates inflationary pressure, and once prices go up, it is not easy for them to come down again," he said in a Facebook post on Thursday (March 26).
Dr Wee also noted that the price of diesel had increased three times in three weeks by exactly 80sen each time to reach RM5.52 per litre.
“Is this a coincidence or the result of the Automatic Pricing Mechanism (APM) formula announced previously?
"If calculated using the APM formula, it is impossible to round it off to exactly 80sen. Has the APM formula changed, or has a tax component been added without our knowledge? The government needs to clarify this," he said.
Dr Wee added that while many people were already angry with the government, his intention was to question why the sudden increase was necessary and to highlight what the government should do next.
To address the issue, Dr Wee urged the government to use the nation's financial strength to cushion the impact of rising global prices on the people, similar to measures taken by neighbouring countries.
"The government's duty is to protect the people, not to transfer price shocks directly to them.
"If the government still wants to revise diesel prices, it should be done gradually and prudently. Increase it little by little so the market can adjust, businesses can plan, and the people can breathe," he added.
Dr Wee reminded the government that a sudden spike in diesel prices would lead to a broader increase in the cost of food and essential goods.
"The people are already struggling; do not make life harder for them," he said.
Prior to Iran’s closure of the Strait of Hormuz on Feb 28, diesel in Peninsular Malaysia was trading at RM3.04 per litre.
The prices of diesel, meanwhile, remains at RM2.15 per litre in Sabah and Sarawak.
According to the US Energy Information Administration, over 80% of the crude oil and liquefied natural gas that passes through the strait heads to Asia.
