We are expected to lose RM30 billion next year – Najib explains impact of plummeting oil prices on living costs

(Malaysian Digest) – Prime Minister Datuk Seri Najib Tun Razak says that he fully understands the issues currently faced by Malaysians pertaining to the rising cost of living.

In an audio message on his blog www.najibrazak.com today, he said that the government is doing its best to find solutions to ease the burden that Malaysians bear.

With that in mind, Najib felt the need to explain the real reasons why prices of some goods and services increased.

“First of all, it is the external factors that are putting pressure on the nation’s economy.

“When world oil prices drop, the government’s revenue will be reduced. In this context, we are expected to lose RM30 billion next year,” he said in the message.

He said because of this, it will be difficult for the government to intervene such as by increasing subsidies.

He used an analogy where he likened the government to individuals who have limited purchasing ability and capability when their income have been decreased.

“The government’s ability and capability is also limited when the country’s revenue decreases,” he said.

“Secondly, when the country’s revenue decreases, investors will trade in their Ringgit to invest in countries that are not affected by the drop in oil price.

“This results in the Ringgit becoming weaker and causing imported goods to be more expensive,” he continued.

He said that if looked closely, the Ringgit trend is consistent with the oil price trend.

“However, there are those who try to confuse the people about the real reasons behind the increase in prices of goods and the weakening of Ringgit.

“They are trying to blame the government when in fact the government is doing its best to find ways to control the price increase caused by external factors,” Najib said.

He gave an example of the special discounts on public transports that the government announced recently.

He ended his message by saying that the government is looking into other solutions that we need and can be achieved.