Looks like you are damned if you do; you are damned if you don't.
Either way, you have to bite the bullet bitterly.
In response to Fitch's rating downgrade on the economy, the government first rolled back its petrol subsidy by 20 sen per liter; followed quickly by a total withdrawal of sugar subsidy just after the May general elections. TNB was then allowed a 15% tariff increase and the minimum wage for Malaysians was also implemented at the beginning of January. Bad timing!
All these hurried moves were evidently to appease foreign rating agencies and to provide the much desired fillip for companies who are seeking competitive funding from abroad.
Little did policy and decision makers realised it was opening Pandora's box too obtusely for runaway inflation to rear its ugly head. The prices of goods and services started to move up; riding on the tsunami-like inflation waves caused mainly by the price of fuel at the pump.
Prices of both cooked food and produce at the market rocketed. Coffee-shops increased the price of drinks while stall-holders ramped up their food prices by a shocking 50 sen per bowl of your favourite noodle soup or plate of economy rice!.
To stem further price increases, a moratorium was put into place not to increase highway toll rates for a year;with the government compensating concessionaires by giving them RM 400 million to boot!
Interestingly,this sudden move invited Credit Suisse to sound out a caution warning-this move may cause a further down-rating which may lead foreign investors to sell off bonds en masse as well as take money out from Bursar KL stock market; particularly when interest rates are expected to go up in the next half of the year.
As they say what goes around will come around. Spend like a lord, now pay your dues!
You have to pay for your excesses and we are now paying the piper!
Poor Malaysians--getting poorer,aren't we?
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