Diesel and eggs: Rushed policies lead to economic strain, says MCA

AN MCA leader said many of the unity government’s policies are not well-thought-out, causing the public to bear the brunt of this “reckless” approach in the form of higher living costs and even a decline in consumer spending that could hurt economic growth.

MCA vice president Datuk Seri Dr Wee Jeck Seng said after a “shock” 55% overnight ascent in diesel prices, the government had attempted to appease the public by offering a small consolation price in the form of a “meagre 3-sen reduction” per egg.

“However, this does little to offset the significant impact of the diesel price hike,” he said in a statement on Wednesday (June 19).

“While claiming to rationalise subsidies, the government paradoxically allocated RM100 mil to subsidise eggs by 10 sen each, resulting in a nominal 3-sen reduction for Grades A, B, and C eggs.

“This policy inconsistency is evident as businesses pre-emptively raised prices by 50 sen per tray (30 eggs) due to diesel cost escalations, with night market vendors following suit.”

For context, Finance Minister II Datuk Seri Amir Hamzah Azizan recently announced that the government had set the pump price of diesel at all retail stations in the peninsula at RM3.35 per litre, up RM1.20 from June 10.

Meanwhile, on Monday (June 17) Prime Minister Datuk Seri Anwar Ibrahim said the retail prices of Grade A, B and C eggs across the country had been reduced by three cents as part of the government’s new subsidy initiative.

Anwar said the new prices for Grade A, B and C eggs will be set at 42 sen, 40 sen and 38 sen per egg, respectively.

On this issue, Wee said this begs the question if a three-cent price drop per egg would truly incentivise businesses to lower their prices, and if it would meaningfully lessen the expenses of low- and middle-income families.

“Does the government believe a 90-sen discount for a tray of eggs will suddenly make Malaysian families eat eggs for every meal?” Wee questioned.

“Government policies need to be more grounded and address the most immediate concerns of citizens.”

Wee noted that while the government continues to offer subsidies through the Diesel Subsidy Control System (SKDS) versions 1.0 and 2.0, it had excluded certain diesel users who now face a sudden increase in costs that would inevitably be passed on to consumers.

He added that the domino effect of rising prices for all goods will lead to a decrease in consumer spending, and ultimately, this cycle could result in business closures due to unsold goods, further weakening the national economy.

“The hasty implementation of a diesel price float cannot be offset by a 3-sen reduction in egg prices. In the face of rising prices, in addition to monitoring and enforcement, the government should review the diesel float mechanism, stabilise the market, listen to views from all parties, and ensure comprehensive implementation of relevant policies,” Wee asserted.

“At the same time, instead of spreading themselves thin by offering a nationwide 3-sen discount on eggs, the government should prioritise targeted support for low- and middle-income households struggling with rising prices. This aligns more closely with the principles of targeted and rationalised subsidies.” – June 19, 2024


Main pic credit: The Star

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