The Institute for Democracy and Economic Affairs (IDEAS) has cautioned the government against giving in to the urge to control the prices of goods and services in the wake of the latest hike in diesel price.
The think tank’s external relations manager, Azrul Mohd Khalib, said price controls would create an artificial market and thus harm the economy.
He acknowledged the risk of profiteering in the absence of price controls, but he said the long term effect would be good for the economy.
For instance, he told FMT, consumers would be forced to make informed decisions.
“If shops and services are taking advantage of the increase in the fuel price by charging exorbitant rates or unacceptable prices, consumers must walk away and stop buying from them,” he said.
“It is only through such market pressure that new technologies such as biodiesels can emerge and be sustained to reduce our continued dependence on fossil fuels.
“We don’t need government regulation to impose price controls. We need to act together. Consumers are the market.”
The price of diesel went up by five sen a litre last week. Azrul said the impact on prices of goods and services would be unavoidable because diesel consumption was high in such sectors as energy, plantation, construction and transportation.
As an example, he said, there would be a ripple effect beginning from the cost of operating heavy machinery to the cost of collecting and processing oil palm fruits to the cost of noodles fried in palm oil.
He noted that the new diesel price in Malaysia – RM2.20 per litre – was still lower than the average price of the fuel in the rest of the world, which is US$0.90 (RM4.01).
“The differences in prices across countries are due to various taxes and subsidies for diesel,” he said.
Source : Robin Augustin @ FMT Online