Abdullah's fuel-hike move falls short

From The Straits Times Southeast Asia correspondent Leslie Lopez

KUALA LUMPUR, June 15 — Prime Minister Datuk Seri Abdullah Badawi's scramble to stem the widening fallout from his high-stakes gamble to raise fuel prices is exposing his government's shortcomings in crisis management.

What's more, the policy flip-flops and the raft of poorly-designed counter-measures have only brought into focus the distortions in the Malaysian economy and Datuk Seri Abdullah's reluctance to confront the powerful vested interest groups that profit from it.

The government's missteps have also allowed the Opposition headed by former deputy prime minister Datuk Seri Anwar Ibrahim to seize the initiative with public sentiment building against the government.

If Malaysians were beginning to feel a tad sympathetic to the many challenges facing Abdullah's government, last week's fuel hike only served to bring to the fore concerns that dominated the public mood just before the early March national election - anger over the rising cost of living, the perception that the Barisan Nasional coalition government is insensitive to the plight of most Malaysians and widespread corruption in government.

It wasn't supposed to turn out this way.

PM Abdullah's allies had expected that the move to partially remove subsidies would allow the premier to regain the political initiative.

By shocking Malaysians with the roll-back on subsidies, Abdullah had hoped to divert public attention away from the crisis gripping his United Malays National Organisation party which leads the Barisan government.

He also envisioned that his bold initiative would prompt senior Umno leaders, who are key ministers in his Cabinet, to set aside their differences and rally behind him to implement this major policy initiative.

Instead, the move to roll back fuel subsidies has come in for criticism from within the party and outside.

There are several reasons Abdullah's gamble backfired.

For starters, it is seen as a public relations fiasco. The decision last week to raise fuel prices by 41 per cent and diesel by 63 per cent was made without any substantive concessions to Malaysians on how the government, which is raking in record profits from it oil exports, intended to alleviate the economic hardships from the roll-back in subsidies.

When the government did announce the counter measures, it fell short of what the public was hoping for.

The government didn't offer any direct financial assistance to alleviate the pain faced by Malaysians from rising costs.

Instead, the raft of counter-measures, amounting to about RM2 billion in savings, featured cuts in spending on government-sponsored seminars and travel for civil servants.

Opposition leaders have been quick to attack the government's measures, arguing that it underscored the growing disconnect between the country's political elite and the public.

That's because the cost-cutting measures also provided Malaysians with a peek to the lavish perks government ministers enjoy.

Abdullah said that his ministers would take a 10 per cent cut in their monthly entertainment allowances.

But Malaysians didn't even know that the prime minister got a monthly entertainment stipend of RM18,865, his deputy RM15,015 and his Cabinet ministers RM13,320 a month each.

Malaysians also didn't know that their ministers and their families were entitled to one all-expense paid holiday annually to any destination.

As part of the government's new austerity drive, holidays will be limited to Malaysia's Southeast Asian neighbours.

The roll-back on subsidies has also renewed criticisms of subsidies and distortions in the economy and the shortcomings in Abdullah's reform agenda.

Many Malaysians say they are ready to pay the market price for fuel, as long as they get a chance to pay market prices for imported cars and are relieved of the burden of toll charges on the private road networks that criss-cross the country, particularly greater Kuala Lumpur.

Malaysians pay a high tax on imported cars because the government subsidises its national car

project.

The government also has a policy which enables a select group of ethnic Malay business to profit from the import of cars manufactured outside Malaysia, an industry which is estimated to be worth close to RM1 billion annually.

With his bid to regain the initiative dashed, Abdullah declared this week that fuel prices wouldn't be raised for the rest of the year.

But many Malaysians believe that he will renege on that pledge should global oil prices spike in coming months.

His approval rating of 91 per cent when he took power in November 2003 has now slipped to just under 50 per cent, according to market research firm Merdeka Centre.

That figure is expected to test new lows when findings of a new survey are released later this month.

Despite being assailed from all sides, he has no intention of handing power anytime soon.

Businessmen and politicians who have met with him in recent weeks say that he is determined to mount a fight-back to restore the popularity of his ruling Umno and the Barisan Nasional government.

But as inflation picks up, economic growth falters and the drudge of having to make ends meet for ordinary Malaysians take its toll, Abdullah will have to wake up to the reality that the Malaysia he inherited more than four years ago has changed radically.