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In light of the 78 cents increase in fuel price, I predict there will be 3 immediate effects:
1. Abdullah Badawi will not be the PM for long. People will feel the pinch immediately and more dissatisfied with the federal government.
2. Inflation will hit record high and if not managed properly, the Malaysian economy will suffer.
3. Protests from parties that do not understand the issue at hand and try to politicize it.
I do agree that the government is making the right move to abolish the oil subsidy. However, I do not think they are managing it quite as well. Given that we are facing food crisis and grain prices increased substantially since early this year, increasing the fuel price by 40% overnight will send shocks to the economy and people.
Instead, there should be a plan since years ago to slowly restructure the oil subsidy. This is to shield adverse market correction that may trigger the economy to go into recession. The government needs to show its ability to control the inflation. However, Inflation is a wild beast that’s hard to tame.
