Roundup: Malaysia moves to cushion impact of oil price hike

The Malaysian government has been seeking ways to get around as the price of crude oil on the world market seems soaring higher and higher over the past months, and a surprise package of measures that it unveiled on Wednesday sent the country's campaign to cushion the impact of oil price hike to a new height.

The Prime Minister's Office Wednesday issued a statement, announcing that the government will not raise the prices of petroleum, diesel and cooking gas until the end of this year and the government will not allow highway operators to heighten their toll rates until Jan. 1 2007.

Also, the government decided to slash the road taxes on vehicles (motorcycles included), with the cut ranging from 25 percent to 80 percent, effective from Sept. 12. For instance, the road tax on some types of private vehicles will be reduced by 50 percent while the tax on all types of commercial vehicles will be cut by 25 percent.

Meanwhile, the government plans to improve the welfare for some groups. The elderly and the hard-core poor will get more aid from the Welfare Services Department, the office noted, while promising better care for those children who are orphans or from poor, less fortunate families.

The office also warned traders not to increase the prices of goods unscrupulously, stating that relevant government agencies will take concerted actions while profiteering traders will be dealt with strictly.

The Malaysian government has raised the oil prices four times since last October. The last one was announced on July 30, pushing the petrol price to 1.62 ringgit (0.43 US dollar) per liter and diesel price to 1.281 ringgit (0.34 US dollar), effective as of July 31. The frequent hike in oil prices has triggered some dissatisfaction among Malaysians.

Traders and businessmen have complained about rising operation costs while the public, especially people of lower income, have expressed concerns over the increase in the price of goods.

The Malaysian Consumer Price Index (CPI) rose by 2.8 percent during the first six months on a year-on-year basis while the CPI for July increased by 3 percent. The inflation rate hit a six-year high of 3.2 percent this June, mostly due to soaring petrol prices and transportation costs. The average inflation rate throughout this year until next April is expected to breach 3 percent, the central bank forecast at the end of August.

The Prime Minister's office, while voicing its concern that the increase in goods price might have reduced the purchasing power of the consumers, said the package aimed to lessen the burden of the Malaysian people, especially those of lower income.

The government's latest announcement was just part of the country's drive to offset the influences of the oil price upon Malaysia, which is an exporter of crude oil.

At the end of July, the government required all employees in the public sector to turn up the temperature a little bit in all air-conditioned offices in order to save energy and reduce costs.

In addition, the Malaysians are encouraged to use their private cars less and instead take public transportation or share cars to go to office.

Meanwhile, the Malaysian government has been encouraging the country's research institutions, universities and companies to develop alternative energy. The biofuel policy is a case in point.

Malaysian Prime Minister Abdullah Ahmad Badawi said in early August that the government was formulating a national biofuel policy to promote the production and use of palm oil-based biofuel as an alternative and environment-friendly energy source.

The policy would encompass a three-level strategy involving the production and use of biofuel for the transportation and industry sector, biofuel production for export purposes especially to the European market and the commercialization of biofuel technology as a home-grown technology by the Malaysian Palm Oil Board (MPOB).

He hoped this move would reduce the public's dependence on the use of diesel, which is costly and not so environment-friendly.

Local sources said the Malaysian government is expected to announce more measures in the 2006 budget to be presented on Sept. 30.

Source: Xinhua