ALOR STAR: Datuk Seri Muhammad Sanusi Md Nor has taken a swipe at the federal government for implementing diesel subsidy rationalisation in haste and without valid justification.
The Kedah Menteri Besar claimed that the increase in diesel prices from RM2.15 to RM3.35 per litre, exceeding 50 per cent, would create a chain reaction leading to a spike in goods prices.
"I believe all Malaysians had high hopes (for the unity government), but they ended up being disappointed.
"I think the move was not properly detailed because even padi farmers, who belong as the poorest group in Malaysia are not being taken into account.
"The government said it wanted to help the poor, to deny subsidies to the rich, but in reality, the poorest group is being left out from the targeted subsidy," Sanusi said in a press conference after projects balloting programme at Wisma Darulaman here today.
He said following the diesel subsidy rationalisation, the cost of padi cultivation per hectare is set to jump from RM1,545.25 to RM2,534.21, an increase of nearly RM1,000.
Sanusi said the calculation was based on the rental hike for tractors and padi harvesting machinery following the increase in diesel prices.
"Following the move, the profit margin of RM1,116 for every 1.3 metric tonnes of yield earned by the farmers will be depleted to RM828," he said.
Sanusi further claimed that the unity government's justification that the move was done to curb massive leakage in diesel subsidies was unacceptable.
"The government claims that half of the RM15 billion diesel subsidy was lost to smuggling activity. That means RM7 billion worth of subsidised diesel was smuggled.
"However, someone has calculated that in order to smuggle that massive amount of subsidised diesel, it would take about 40,000 tankers a day, either by road or by water.
"Is that true? If that's the case, then we have to ask what the smuggling prevention agencies have been doing?
"Those agencies are under the Home Ministry, so we must ask what the Home Minister has been doing? (to curb the smuggling activity). Nobody could offer a convincing explanation," he said.
Sanusi also urged the federal government to apply Variation of Price (VOP) for government projects to mitigate rising construction costs following diesel subsidy rationalisation.
"We can't escape from the reality that none of the contractors are willing to suffer losses. Projects are ongoing and suddenly the cost of construction jumped.
"Probably they will come back to us (the government) but it is something beyond their control and also beyond our control.
"Therefore, the government has to reconsider introducing VOP to absorb the additional cost," he said.
Yesterday, Malaysian Malay Contractors Association (PKMM) vice-president I Mohamad Fauzee Mohamad urged the government to reinstate the VOP clause for government contract projects, covering all items involved in project completion.
He said the move is necessary as the cost of materials, particularly precast concrete, to rise between 25 and 60 per cent following the diesel subsidies rationalisation.
Sanusi also urged Economy Minister Rafizi Ramli to explain a formula to debunk a theory that the rise in fuel prices would not result in goods prices hike.
"There is no record in world history that there is no increase in the price of goods following the hike in fuel price. If Rafizi has the formula, please show to us, we wish to see that," he said.