Thu, May 29, 2008 - Page 1 News List

Price hikes helped avert bankruptcy: economist

UTILITIES HURTINGA research fellow at the Institute of Economics at Academia Sinica said adjusting the cost of fuel and electricity would lessen the firms’ losses

By Flora Wang, Mo Yan-chih, Shih Hsiu-chuan and Ko Shu-ling  /  STAFF REPORTERS

Legislative Speaker Wang Jin-pyng (王金平) suggested yesterday that the Cabinet change the way it announces price hikes, when he was approached by reporters for comment.

“People’s feelings should also be taken into consideration when the Cabinet is drawing up the policy,” he said.

Meanwhile, Kaohsiung Mayor Chen Chu (陳菊) urged the central government to notify local governments before it makes such announcements, so that they can take measures to ensure order.

The DPP stalwart was referring to the long lines of vehicles lined up outside gas stations nationwide on Tuesday night after the Cabinet’s announcement.

Kaohsiung Police Bureau Director Tsai Chun-chang (蔡俊章) told the Kaohsiung City Council that the bureau had to dispatch 446 officers to maintain order near stations.

The DPP criticized the government for raising fuel prices and failing to map out complementary measures to minimize the impact.

DPP spokesman Cheng Wen-tsang (鄭文燦) said the KMT administration owed the public an apology and should offer a plan to minimize the burden of the hikes on low and medium-income families.

“The new government is an out-and-out price-raising Cabinet,” Cheng said. “The Ma Ying-jeou (馬英九) administration has failed its first test since taking office.”

ANTICIPATION

Cheng criticized the administration for failing to stabilize commodity prices and the economy. He said the hikes triggered anticipation of more increases and led people to hoard fuel.

The lack of complementary measures would be a significant blow to wage earners and the disadvantaged in particular, he said.

The increases focused mainly on petroleum for consumer products, while oil for industrial purposes rose just 50 percent, Chen said.

During the DPP administration, Cheng said the increase of commodity prices was kept to less than 2 percent, but the consumer price index is estimated to increase to 4 percent or higher under the KMT.

In addition, the KMT administration had already said utility prices would go up in July, he said.

DPP Chairwoman Tsai Ing-wen (蔡英文) said that the Ma administration had not considered the psychological impact of the hikes and public anticipation of an overall jump in commodity prices.

She said the administration’s economy stimulus package might make things worse. It would only do more harm than good if the 12 infrastructure projects and other packages aimed at increasing domestic demand brought more foreign labor and imported goods, she said.

Ma had said that the price hikes were necessary and the longer the government waited, the more painful the hikes would be, Tsai said. But she said the short-term pain might turn into an incurable disease.

The DPP legislative caucus urged the Cabinet to immediately ban the exportation of petroleum-related products.

“The Cabinet decided to raise gas prices but also decided to decrease gas taxes for exported products. That obviously benefits Formosa Petrochemical Corp (台塑石化), since it has been increasing exports of petroleum-related products since January,” DPP Legislator Lin Shu-fen (林淑芬) told a press conference yesterday.

Lin said Formosa Petrochemical Corp would earn an additional NT$1.3 billion (US$43 million) a month now that taxes on exported products dropped.

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