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The Malaysian prime minister took the economically-sound but politically-painful (if not suicidal) route by raising fuel prices some 40%. His popularity has already been in the dumps, what after March’s elections, and this wouldn’t help (Anwar Ibrahim’s threats of unseating him by Malaysia Day, 16 September, notwithstanding).

But one painful hit is better than a gradual removal of subsidies, especially with opportunistic cowards preferring to do the populist rather than the right thing. If the idea is to help the poor, subsidizing petrol for the various BMWs and Mercedes that cruise Sri Hartamas does squat. Targeted subsidies (though I’m not sure this is the most effective way, being done annually using road tax) does a lot better on this regard.

Out of curiousity though, news of the hike and the resumption of market prices came some a week after the knee-jerk, horridly stupid ban on foreign cars filling up near border regions. A sign, clear as any, that the Cabinet didn’t think this out that particularly well – the redundancy of the earlier policy is astounding (it would be funny though if the ban is still enforced in northern Malaya – seeing that petrol is now cheaper in Thailand). But out of the shroud of random, poorly-thought off policies, it is refreshing one of it actually makes sense.


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