Press Statement by DAP Secretary-General Lim Guan Eng in Petaling Jaya on 12.1.2008:

As BN will definitely increase prices after elections with subsidies of RM 40 billion annually completely unsustainable, Malaysians must demand a full commitment from BN to an equal share in Petronas profits

The Star estimated on 10.1.2008 that the Malaysian government will spend RM 40 billion on subsidies annually between 2007-8, with RM 35 billion in fuel subsidies and RM 5 billion in other subsidies such as cooking oil, flour, education, housing and agriculture. This huge amount of subsidies is unsustainable and the only reason that fuel, cooking oil and flour prices have not risen is to allow BN to win votes in the coming general elections.

As BN will definitely increase prices after winning the general elections, Malaysians must press for a full commitment from BN in the coming general elections to demand an equal share in the Petronas profits to reduce Malaysians’ financial burden. BN claims that inflation rate for 2007 is only 2% when the true picture on the ground in more than 20%. When prices are increased, especially fuel, true inflation rate on the ground may go up to more than 40%.

DAP expresses concern that Prime Minister Datuk Seri Abdullah Ahmad Badawi has still not woken up to the challenges of negative impact of high oil prices that has reached US$100 per barrel, the NEP and Malaysia’s declining oil reserves that will turn Malaysia from an oil exporter to a net oil importer in 2011, will damage future economic growth and prosperity. The triple shock of high oil prices, the anti-competition, anti-growth and anti-trade NEP as well as Malaysia’s declining oil reserves are huge challenges that the BN government has not even begun to address.

This oil revenue has allowed Malaysia to cushion the negative impact from mismanagement, wastage of public funds and corruption scandals that have plagued Malaysian society and would otherwise have crippled Malaysia’s economy. When Malaysia becomes a net importer or oil by 2011, one wonders where Malaysia is going to find the tens of billions of ringgit needed to fill in the gap in the nation’s finances.

Oil contributed RM 53,311 million or 37.6% of the 2007 government’s revenue of RM 141,790 million. In other words more than three quarters of oil revenue are used to fund the RM 40 billion subsidies, which is not sustainable and if continued would lead the country to bankruptcy. Despite Petronas earning RM 500 billion since it was established in 1974, Malaysians have not benefited from a single cent in sharing in the oil revenues. These contrasts with an oil importer like Singapore that can afford to distribute S$ 2,000-2,500 a year to poor and unfortunate families.

US financial giant, Morgan Stanley had estimated in 2004 that over the last two decades corruption cost Malaysia US$100 billion (RM 380 billion). With Petronas earning more than RM 500 billion since it was established in 1974, one can imagine how much was stolen and that only RM 120 billon or 24% of the RM 500 billion in Petronas profits were channeled to the people with the remaining 76% or RM 380 billion stolen by corrupt officials.

In other words for every RM 4 spent on development projects, the value of work done is only RM 1 with the remaining RM 3 lost to corruption, waste, inefficiencies and leakages. The actual loss may be higher as the scandal of repairing Chinese primary schools in Muar showed that RM 30,000 was spent when the value of work done was only RM 3,000/-.

The time has come for Malaysians to demand a general election commitment from BN to give an equal share in Petronas’ profits. Those earning less than RM 3,000 per month is given an annual cash grant of RM 3,000 and families with a combined income of RM 6,000 per month be given RM 6,000 annually. Such a scheme would cost slightly more than RM 30 billion annually, less than the RM 40 billion subsidies spent. Better the oil money is spent on the people than be wasted by corruption or white elephant projects that are not productive except to the contractors.

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* Lim Guan Eng, DAP Secretary-General