Malaysia's government wins first test of strength in Parliament over fuel price hike

AP (23/6/08): Malaysia's government won a vote in Parliament Monday on its decision to raise fuel prices, passing its first test of legislative strength after being mauled by the opposition in general elections.

The victory will be seen as a vote of confidence in Prime Minister Abdullah Ahmad Badawi's ruling National Front coalition, including his highly unpopular June 4 order to raise gasoline prices by 41 percent and diesel prices by 63 percent.

Parliamentary speaker Pandikar Amin Mulia announced that a nonbinding motion to support the price hike was passed in a vote after a daylong debate in the 222-member house.

Pandikar said: "129 legislators supported the motion and 78 opposed. Therefore the motion is passed." He did not say how many members abstained or how many were absent.

A loss of the vote would not have brought down the government or overturned the price hike. But it would have been a major embarrassment for Abdullah, who has faced calls from his own party members to step down for returning the Front to power with a vastly reduced majority in the March 8 elections.

The opposition had hoped to turn it into a vote of no confidence, but the government was never in danger of losing such a vote unless ruling party members turned against Abdullah. The National Front has 140 lawmakers against the opposition's 82.

"This is a victory vote that oppresses the people. We regret it," said Salahuddin Ayub, a lawmaker of the opposition Pan-Malaysian Islamic Party.

The vote also eases fears that Front lawmakers would abandon Abdullah and defect to the opposition led by former Deputy Prime Minister Anwar Ibrahim.

"There is no question about Front MPs wanting to jump over to the other side," said Nazri Abdul Aziz, a Cabinet minister.

During the debate, Domestic Trade and Consumer Affairs Minister Shahrir Abdul Samad defended the fuel price hike.

"The government was forced to make the unpopular move of hiking fuel prices but it has not neglected its social responsibilities," he said.

After the government drastically reduced decades of subsidies, the pump price of gasoline price went up to 2.70 ringgit a liter (US$3.20 a gallon) - still cheaper than in most countries in the region.

Shahrir said the subsidy system was inefficient.

"As we move towards becoming a developed nation our subsidy system needs to be restructured gradually to ensure that our economy is really efficient and competitive," he said.

The opposition rejected the argument.

"We feel that the government does not really understand nor realize the impact of the fuel price hike," said Lim Guan Eng of the opposition Democratic Action Party.

Earlier Monday four opposition lawmakers, one in a suit and the others in shirts and ties, arrived at Parliament on bicycles to highlight the fuel price hike.

"We want the people to know that we understand their hardships and that we will fight for them in Parliament," said N. Gobalakrishan who, along with his three cycling companions, was sweating profusely.

Govt only saved RM1.4 bln from petrol price hike in 2006, says PM

Bernama (27/5/08): Prime Minister Datuk Seri Abdullah Ahmad Badawi said the real subsidy savings for the Government was RM1.4 billion following the petrol, diesel and Liquefied Petroleum Gas price increase on Feb 28, 2006.

Although the price of petrol and diesel was increased by 30 sen per litre and LPG by 30 sen per kg on Feb 28, 2006, following the cut on subsidy cost, the estimated savings of RM4.4 billion as announced by the government was based on the price of world crude oil being US$61 per barrel at that time.

"However, as the price of crude oil continued to climb for several months hitting US$74 per barrel, the actual savings as at December 2006 was reduced to only RM1.4 billion," he said at the Dewan Rakyat sitting here Tuesday.

The actual savings of RM1.4 billion was based on a crude oil price of US$74 per barrel.

Abdullah said this in his written reply to a question from Salahuddin Ayub (Pas-Kubang Kerian) on the total amount of money spent from the savings of RM4.4 billion from the oil subsidy cut which was meant to be used for improving public transportation services.

Abdullah, who is also Finance Minister said the savings were channelled in stages into the National Public Transportation Trust Fund (KWAPA) which was set up in May 15, 2006.

He said among other objectives, KWAPA was established to upgrade the integrated public transportation system in the country as well as improve the quality of public transport especially in terms of coverage and frequency of services.

"A total of RM550 million has already been channelled into KWAPA and RM498.77 million have been spent and identified for expenses related to improving the public transportation system.

"The remaining savings will be channelled into KWAPA in 2009," Abdullah said.

He said the total subsidy borne by the government for petrol, diesel and LPG from 2000 till 2007 was RM37.4 billion.

For 2006, the amount of subsidy for petrol, diesel and LPG was RM7.3 billion while for last year it was RM8.7 billion and the projected amount for this year is RM18.31 billion based on a crude oil price of US$105 per barrel, he said.

"This amount will go up based on the world price of oil which has continued to rise, and is currently at US$130 per barrel," Abdullah said.

He also said the government would continue to look into the welfare of the people and on ways to reduce their burden amid the increasing price of oil.