Malaysia’s leader urged the world yesterday to consider drastic steps to ensure fuel and food security, including curbing oil speculation.
Malaysian Prime Minister Abdullah Ahmad Badawi said the steep rise in world oil and food prices demands a coordinated global response because “national and regional efforts are naturally limited.”
“The international community must be prepared to consider bold and unprecedented measures,” Abdullah said at a conference on regional security. “The burden which is now borne largely by the developing countries and the poor can easily spill into the developed societies.”
Abdullah said one option could be to suspend the trading of oil on the futures market “to prevent speculative biddings,” similar to how Japan has no trading in rice futures.
“We should examine such steps for possible application to the oil market, itself an important contributor to the soaring prices of other commodities,” Abdullah said, adding that such measures would “require negotiation and agreement at the international level.”
BUYING
Speculative buying has been cited as a major reason behind the more than doubling of the price of oil in a year. The Organization of Petroleum Exporting Countries has said the world is well supplied with oil and that the higher prices are driven by financial speculation.
High oil prices have also contributed to food prices skyrocketing worldwide along with other factors such as changing diets, urbanization, expanding populations, flawed trade policies, extreme weather, growth in biofuels production and speculation.
Abdullah urged other Southeast Asian nations to cooperate with China, Japan and South Korea to ensure food security, especially by creating “a viable rice reserve scheme that has the full commitment of all participating countries.”
Such measures could be taken under projects such as the East Asia Emergency Rice Reserve, Abdullah said. The rice reserve project — currently in a preliminary stage — is for use in natural emergencies or major disasters.
Malaysia is one of the countries hit hard by rocketing oil and rice prices.
It normally imports between 700,000 tonnes and 800,000 tonnes of rice annually, but its purchases are likely to be higher this year due to efforts to build up a buffer stock of three months, up from the current 15-day stock.
Malaysia plans to spend at least 725 million ringgit (US$224 million) to subsidize, for the first time, 550,000 tonnes of selected types of imported rice this year.
SUBSIDIES
But subsidies on fuel — predicted to cost the treasury 45 billion ringgit (US$14 billion) this year — are expected to be dismantled in August.
Domestic Trade and Consumer Affairs Minister Shahrir Abdul Samad said yesterday that the government plans to remove price controls on gasoline and diesel, allowing their sale at world market prices by August.
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