Malaysia’s fuel subsidy is now at 30 sens per litre, and overnight petrol rose by 41% from RM 1.92 a litre to RM 2.70 a litre. The Abdullah government, shaken by the unflattering results of the general election, is offering a RM 625 cash rebate for owners of cars smaller than 2000 cc. Is this olive branch offset enough to stave off public unrest? The Malaysian populace is not a docile lot and this could be the straw that finally breaks the BN government’s back. Fuel subsidy is a popular but fiscally questionable policy in these times. Abdullah’s critics are smart enough to opportunistically attack him and undermine his rule. Reducing fuel subsidy overnight such that petrol jumps up by almost RM 1 a litre is tough to accept. As the media had widely reported, an increase in fuel price would have a ripple effect on delivery costs and in turn almost all retail including food costs would go up. Separately, home electricity costs are already going up in tandem with the rising crude oil prices. Malaysia is a powder keg unless the government makes a u-turn, or a great propaganda spin.
And if BN doesn’t make a u-turn, inflation in Malaysia is only going to creep into Singapore e.g. food imports - 46% of our vegetables, 37% of our chicken is from Malaysia. This would add pressure upwards on the already rising food costs in Singapore. And if BN doesn’t make a u-turn, would there be riots and how would the unrest affect Singapore? July 12th, the massive demonstration planned in KL, would be a barometer of how bad things are.
