Diesel subsidy cuts felt by housewives, restaurateurs

By Melissa Chi

Malaysian Insider, June 23, 2011

KUALA LUMPUR, June 23 — All through the Pudu wet market, one of the biggest in the Klang Valley, one can hear customers complaining that prices of goods are shooting up while sellers try to convince them that they are not profiting as well since the start of 2011.

This conversation is repeated across the country from Perlis to Sabah, reflecting the 2.9 per cent hike in the Consumer Price Index (CPI) for the first four months of 2011 but more since June when Putrajaya cut diesel subsidies for hauliers and trawlers, adding to the price of basic food items and other goods.

People buying fish at the Pudu wet market. Customers are complaining that prices of almost everything have gone up. — Picture by Choo Choy May

Restaurant owner Kak Mai told The Malaysian Insider that when prices of chicken and fish go up, she can’t raise the prices at her restaurant.

“I’ll just have to make less, what to do,” the 53-year-old said, pointing out that siakap fish (barramundi) has gone up from RM20 to RM24 per kg in the past few days, although she expects prices to come back down.

Fifty-six-year-old Mrs Cheong , who operates at a school canteen, was buying fish in bulk when approached by The Malaysian Insider.

“I sell at a school canteen, after signing the contract, the price is fixed and I cannot hike the price at all,” she said, adding that her profit went down from 20 per cent to 10 per cent in the past few weeks.

Until May 31, 2011, C2 trawler operators received a subsidy of 28,000l to 30,000l of diesel per month at RM1.25 per litre. Diesel super subsidies were removed for the C2 fishing trawlers and nine other logistic-related groups this month.

Those operating trawlers in the C2 category or 30 nautical miles offshore have been on strike since June 11 over the June 1 diesel price hike from RM1.25 to RM1.80 per litre.

Prime Minister Datuk Seri Najib Razak launched the Kedai Rakyat 1 Malaysia (KR1M) no-frills grocery shops yesterday in a move to mitigate rising prices of dry goods in the Klang Valley.

But the prices in the wet markets are subject to volatility.

Mohd Rosli Osman, 43, who was shopping for his family, pointed out that kerapu (grouper) went from RM9 to RM12 per kg and ikan bawal (pomfret) from RM8 to RM15.

Chan Soon Hoong, 48, who has been selling fish for 30 years, said the government should continue to provide the diesel subsidy.

“It costs twice as much now for almost anything,” he said.

Yuslizal, 42, another fishmonger at the market, agreed.

“The government should continue to subsidise. If the prices are too high, consumers don’t want to buy. Many of my customers complain about the price hike and they don’t know the reason why,” he said, adding that with less sales his profit margin has grown smaller, sometimes he just breaks even.

Rudi, 28, who has been operating at the market for three years, sells only freshwater fish such as pacu, rohu and tilapia.

He said the prices of his fish have also gone up as without the diesel subsidy transportation costs have gone up as well.

“Luckily I just sell freshwater fish because sea fish are way more expensive,” he said.

Mohd Erfan, 29, who sells chicken next to Rudi’s stall, said the price of chicken went up 30 sen continuously over the past three days.

As he was chopping up pieces of chicken, he explained that regular customers who run restaurants have cut down their orders from 10 birds to six per order.

He sells about 200kg to 250kg of chicken per day.

However, when The Malaysian Insider spoke to vegetable sellers, they said that there was no hike in their prices. Most of their vegetables come from Cameron Highlands.

The Najib administration has to take a razor to its subsidy bill despite surging inflation which hit a two-year high of 3.2 per cent in April as it attempts to trim the budget deficit down to 5.4 per cent after it hit a two-decade high of 7 per cent in 2009.

For the first four months of the year when the CPI averaged 2.9 per cent up, the three indices that rose highest was Transport (+ 4.6 per cent); Food and Non-Alcoholic Beverages (+ 4.5 per cent) and Housing, Water, Electricity, Gas and Other Fuels (+ 1.5 per cent).

Putrajaya said the June 1 subsidy cuts would save RM659.30 million, and had to be done due to the global increase in fuel prices since the start of 2011. Coincidentally, it brought down the market float price of RON97 premium petrol by 10 sen to RM2.80 a litre this month when global prices eased.