An excellent writeup from Brendan Pereira today, over here, which I read just after reading Totoro’s entry on cost of living. Mr Pereira makes an interesting point about the political costs of reducing fuel subsidies to PM Badawi; it’s a hard pill to swallow, but it’s something we need desperately. As the price of raw crude escalates on a global level, our inability to remain competitive despite such increases except with government subsidies is troubling.

Mr Pereira remarks:

Nowhere is this dilemma more evident than in the desire by the Abdullah administration to bring the fuel subsidy to a more realistic level. Reducing the subsidy that Malaysians have enjoyed for decades makes good economic sense.

Making petrol and diesel artificially cheap for everyone from the lawyer to the janitor can never qualify as a productive use of resources.
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Also, shielding the population and industry from the spike in world oil prices only encourages inefficiency and distorts the true picture of the country’s competitiveness.

Just on the personal side of the equation, my profession requires a great deal of travel in the Johor region and therefore fuel prices make up a very large part of the costs for carrying out our work. As Mr Pereira later remarks in his article, fuel prices tend to affect the cost of everything, but the corresponding news from the ground (friends and relatives) is that the corresponding increases in remuneration to meet all these costs is not forthcoming.

There were quite a number of arguments on local fora regarding costs of living, the effect of petrol price increases and such tossing back and forth. The point of agreement between all parties seems to be that while our ballooning expenses are moving towards more ‘realistic’ prices, our effective purchasing power has been taking a dip year-on-year. Some have pointed to the value of our ringgit compared to foreign currencies as the ultimate cause of this disparity but it somehow feels too quick an answer.

I’ll have to study the matter further before making a cogent response. In the meantime, check out Totoro’s entry for a preliminary for further discussion.

On the political costs of Badawi’s actions, I don’t know how Badawi’s recent policy moves will be interpreted on the ground. From what I understand after discussions with some friends, his current moves to stem corruption both in the civil service and amongst politicians were met with an understandable skepticism. The more cynical of my friends have suggested that even the recent suspension of En Isa was politically motivated; this casts a shadow of doubt over the anti-corruption drive being pursued, since it will be viewed as being politically expedient.

The problem with a view such as the above is that it is not based on fact, but which details have been circulated in the grapevine.

And we have to be clear about something: what is fact, or true, rarely if ever informs perceptions.

I think that’s the most damaging point at the moment. Perceptions have a far greater hold on people than the truth. Machiavelli knew this, Pericles knew this, and a host of other eminent political thinkers knew this.

If Mr Pereira is right about the Opposition taking advantage of the short-term woes arising from recent policy moves, then it can only bode less well for Badawi; not only does he have to deal with perceptions, but he has to deal with politicians reinforcing these perceptions for political mileage.

With respect to perceptions, I have one anecdotal piece of information from the situation here in Johor Bahru. As early as September 2004, there have been vigorous operations in Johor Bahru to clean up the city. As my line of work required me to be in the know about goings-on in the seedier underbelly of JB’s community, I began to hear reports and rumours of massive drug raids, publicized or otherwise; crackdowns on drug distribution networks, on pubs and discos that actively promote sales of drugs and such; massive raids on “papaya farms” (girlie joints) with equally massive deportations of Indonesian, Thai and Vietnamese illegal immigrants/workers, and etc.

While my clients and friends complained, it was a welcome relief to those of us who felt helpless at the status quo. Badawi was down recently for massive celebrations at Danga Bay. My parents who attended came back smiling and talking non-stop about fireworks displays and such. Not one week after witnessing the PM and his entourage taxi down Jalan Wong Ah Fook, empty of all vehicles but his and his own, I began hearing news of discos, girlie joints and the like opening up for business (with increased prices, of course ;) ). It was as if the on-going raids leading up to the PM’s visit were all for show, to clean up the city temporarily before his arrival and then to drop everything like hot potatoes after his visit.

From my own point of view, our reputed ‘Sin City’ seemed to have weathered the storm of police scrutiny over the almost-one-year period, and nothing has changed. And while these raids were going on, petty corruption at the lower level was still on-going. From a broader perspective, I have yet to witness the real trickle-down effects of anti-corruption moves in Kuala Lumpur, and I’m hoping that it will happen soon. Badawi’s laid the groundwork, and at this point in time I would be holding back my natural skepticism if only to wait for real results. I just hope he doesn’t pay too high a price to do the right thing.