Standard of living will be hit, says Dr M

Friday June 6, 2008

PETALING JAYA: There will be inflation and the standard of living will go down.

That’s the effect the higher fuel prices will have on the people, said Tun Dr Mahathir Mohamad.

He noted in his blog yesterday that the increase in petrol prices was far less than in Britain or the United States.

“But our per capita income is about one-third of theirs. In purchasing power terms, our increase is more than in the UK or the US,” he said.

Dr Mahathir said that to lessen the burden from the world fuel price hike, the Government should not have floated the ringgit in the first place.

“A floating rate creates uncertainties and we cannot gain anything from the strengthened ringgit. Certainly the people have not experienced any increase in their purchasing power because of the appreciation in the rate between the US dollar and ringgit,” he said.

“But since the Government wanted to please the International Monetary Fund and World Bank by floating the ringgit, the result of the strengthening of the ringgit merely increased the cost of exports without lowering the cost of imports.”

In Alor Star, Jerlun MP Datuk Mukhriz Mahathir said the Government should not have over-reacted to the artificially-inflated world prices.

Instead of restructuring the country’s subsidy package accordingly, the authorities should have formulated strategies to cushion the impact, he said.

“The rakyat is already burdened by the rising cost of living. We cannot justify the increase by saying that our fuel price is still lower than Singapore,” he said.