Businesses can easily absorb fuel price hike, says Mahathir

The recent hike in fuel prices should only result in a 5% increase in the prices of goods and services, said former Prime Minister Tun Dr Mahathir Mohamad (pic).

"Fuel makes up only a small portion of costs for producers and businesses. Therefore, any fuel price hike can be absorbed by the businesses.
"There is no need for businesses to increase the price of their goods and services. Fuel only makes up 10% of input for products and services," Dr Mahathir said in a blog posting today.
Dr Mahathir was of the opinion it was a percentage which any business could easily absorb without passing the cost to the public.
Although there were certain products and services which used more fuel, Dr Mahathir said in such cases, the increase in the price of goods and services should only be about 5% to 10%.
"Any subsidy rollback should be done gradually, so that the public will be able to slowly adjust. But it's a fact which Malaysians must slowly accept, prices will increase."
He also cautioned the government to be more prudent in the Bantuan Rakyat 1Malaysia (BR1M) payments, as he had noticed some recipients drove new cars and lived in decent homes.
"Malaysia mustn't be like failed socialist regimes who have shown the folly of continuous handouts which creates over-dependence, poor productivity and revenue for the government."
Domestic Trade, Cooperatives and Consumerism Minister Datuk Hasan Malek had previously revealed that research showed prices of food should only rise by 0.1%.
The Real Estate and Housing Development Association had also estimated the price of new homes to increase by 10% due to the fuel hike and operations against illegal immigrants.
Prime Minister Datuk Seri Najib Razak called on businesses not to increase the prices of goods and services when making the announcement on Monday. - September 6, 2013.