Thursday, June 5, 2008
Fuel price hike - the morning after
Malaysians woke up this morning to the grim reality - everything is going to be more expensive from now. The lunch time "chap fun" - or "economy rice" - would not be so economical anymore. For many wage earners, there isn't much of a lifestyle to change in the first place.It is a daily struggle of paying off our expenses. After the deductions by the Inland Revenue Department, the take home pay for many salary workers comes to almost nothing. Michael Chong would be kept busier now with his "Ah Long" stories. That's the reality. Malaysians generally are reasonable. The fuel price is expected and it is not confined to Malaysia. We understand the price increase is inevitable and we know we are still being subsidised. The price of petrol changes everyday in other countries. At current world market prices, the subsidies for petrol and gas is about RM50billion. Australia, like Malaysia, is a net oil and gas exporter but their motorists are paying RM5.70 per litre of petrol. Subsidies have become really huge in Malaysia and politicians who claim they can reduce the prices of fuel are just bluffing. Or they just don't care about long term economic sustainability for the sake of winning votes. But what Malaysians cannot stand is the wastage of public funds. Why do we spend millions to send one person to space is simply mind boggling. Why do we spend millions on grandiose and overpriced projects is another wonder in Malaysia. Or is it a way for greedy politicians to make money? On a lesser scale, can we stop those grand welcome for politicians at functions? They cost taxpayers' money. Why do we tolerate those huge billboards with faces of grinning politicians? Even the new Selangor government is guilty of that. Yes, we have to change our lifestyles because we don't have a choice but we want to see the government - federal and state - cut down on wastages. Be prudent in spending taxpayers money, that's what we want to see.
Posted by The Writer at 2:37 PM
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"Why do we tolerate those huge billboards with faces of politicians? Even the new Selangor government is guilty of that"
Is this true. I haven't seen any such billboards. If its true, then hey PR Selangor State government. STOP IT AT ONCE! or face the consequences in the next GE. I am also very peeved with government projects where they have a slogan on the hoarding saying " Satu Lagi project oleh Barisan National" What balooney. The government does not belong to BN (and that goes for PR) and government projects should not be politicised. If any PR or BN rep reads this...remove all these signs immediately...ditto for billboards. Sheesh!
While the price hike may be inevitable, what upset most including me is the way the Government is spending money without any accountability as though the money is theirs. They keep asking the people to change lifestyle but what are they (i.e the PM, DPM, Ministers, MPs, UMNO leaders etc.) doing to change their lavish lifestyles??? I dont mind to pay the increase but I dont have any trust whatsoever that the present Government will use the savings wisely for the rakyat. I feel that we are all working so hard to sustain their extravagence.
You're wrong; Australia is an oil importer. Source:
Whilst we are on the subject of removing subsidies, when can Malaysians expect the "subsidies" being given to Proton to also be removed?
Talk all u want, blog all u want, scream all u want it won't change the fact that u (& similar minded malaysians) are the one who put those corrupt UMNO/MCA politicians in power due to your own personal interest! The true cause of oil price increase in malaysia is CORRUPTION not due to increase global oil price. In fact, today malaysia via petronas is earning more from petroleum due to higher price & lower cost of production due to technological advancement. But where all the money gone? self serving bastard like u never ask because u won't bite the hand that feed u, eh?
Even as u write this u manage to find out what the 3-mth old selangor govt is doing wrong yet what do u hv to say to UMNO/MCA who had been theiving us for the past 50 years?
If u hv any consience pls publish my comment and let others decide whether they agree with me or otherwise.
We are nett oil exporter. Its a crying shame to bundle us with nett importer countries. Compared to the Middle East countries and Venezuela, we have the highest petrol price. I dont know what rubbish this so called PM is doing. It is just a question of Petronas making less profit on lower petrol and diesel prices but it still making profits.Why spread the "lower profits of Petronas" to all Malaysians? Have the PM and his gang done something bad to Petronas or burnt a black hole there? Until we are given a clear and transparent picture of what is happening at Petronas, we can only assumed something is very wrong there and we are bearing the excesses of the BN Govt.PKFZ is a very good example, smelt of outrageous corrpution in play.
The PM cannot stop the rakyat from uttering four letters and dirty words at him and his Cabinet as he has failed to justify his actions.
He has been jeered in many public functions and I am very sure it will continue wherever he goes too now, maybe louder this time. Yes, we are upset and we don't believe his "story".
I think Malaysians are sick and tired of government comparing fuel prices with other countries. This would not help in alleviating the frustation caused. This time round, we want to know the exact justification for such a drastic act and not mere saying of giving back to the public. Are there proper planning for any eventuality causing other essential items to spiral out of control? Ron
I don't think actual cash subsidy by the government is over RM50bil.
From CIMB's calculations, the actual cash payment by the government for 2008 is projected to be RM18bil, up from RM8.8bil in 2007. Petrol tax forgone is estimated to be RM7bil for this year.
The other element of fuel subsidy is natural gas which is borne by Petronas, which is projected to be more than RM20bil. Since Petronas is a non financial public enterprise, its balance sheet and profits are not counted as being with the government, meanng that in the eyes of the rating agencies etc, Petronas is independent from the Government.
Therefore its gas subsidy is a burden the people of Malaysia is paying, not the Government.
Also I don't see what is wrong with Petronas selling cheap gas in Malaysia as it has entered into long term contracts to sell gas to other Asian countries, presumably at cheaper prices than the current high world prices. If they can sell it cheap overseas, why can't they do the same for Malaysians?
And all this talk about government deficit will rise as fuel subsidies grow is hogwash as from the last I have read, Malaysia is a net exporter of oil and earns, after netting away subsidies, a profit of some US$100 million for every dollar increase in global oil prices.
Through this latest fuel subsidy revision, I feel the government's has raised more money (with a bumper dividend coming from Petronas for its just completed financial year that ended at the end of March).
The question is what will it do with the money?
Also, is there a further hike in petrol prices in August or is this it? It will be very unfair to raise Petrol prices anymore as the current increase is like a tax on the public.
Chun Wai, I agree with you on the wastage. Sending one joker to space to enhance our prestige is probably the dumbest thing. people cannot accept the oil price increases because of stupid projects. And we have to admit we so many stupid projects all over the country. That's why the Barisan government has to set an example. Right now they are doing the opposite. So one cant really blame the people for spitting blood.
So how am i suppose to claim my RM625 rebate since I've renewed my road tax in May?
Why is there no information on how this is to be done?
Has the govt really come up with the procedure? or is it another case of announce first then later(months later) only hold some never ending high-level committee meetings to discuss about the implementation?
Well...this is one sure lifeSTYLE that the govt should change!
It should work out to below AUD2.00 per litre. Dollar to dollar, who is cheaper? And what is AUD's average income? Surely more than Malaysia...
You make great points on spending by our government. Unfortunately cutting back and saving is alien vocabulary for out government because if they do that it will mean a smaller budget allocation to the ministry or department next year.
And in government nobody wants to cut their budgets and if that is true, how can the government have the gall to tell us rakyat to save and make cutbacks.
Lead by example!
I agree that the government should not subsidize the cost of petrol. But why is the government making us subsidize the sub-satandard car called Proton? Why do we have to subsidize a Malaysian space tourist? Why do we have to subsidize a lop-sided contract of the IPP? Why do we have to subsidize the highway concessionaire via a lop-sided highway toll contract? Why do we have to pay for those stupid mega projects now standing as white elephants? BN government, tell us, tell us, tell us WHY we are subsidizing your blady cronies? If we can do away with all those stupid waste of our tax money, we don't even mind paying RM 4.00 per litre of petrol!!!!
Our oil still subsidize?? but our car price is one of the highest in the world, due to AP, excise duty, import tax, sales tax etc. then here tol, there tol, what nonsense to just say our oil price still cheap !
Results of fuel hike. Higher crime rates, more expensive food prices, booming 'Ah Long' business, lower domestic tourism, Newspaper price increased (When is The Star increasing its price???), etc etc.
I rather that the Govt concentrate in reducing wastage than cutting the subsidy. Unless there is more transparency in the Govt expenditure, to me, more money saved from the subsidy means more money to waste. :(
It's just so pathetic when people keep comparing Msian oil price with other countries' such as Singapore and in this case, Australia.
It is not even relevant. First, they earn more and their money/currency worth so much more than Ringgit. Second these countries are net importers of oil for gods sake.
The rakyat is getting more clever that we cant be fooled and blinded by this direct conversion reason anymore.
The MPs of Pakatan Rakyat have finally found a cause that most people not only in Malaysia but around the world can empathize with. And Anwar Ibrahim has finally peeped out of his closet to speak!
Teresa Kok was demonstrating near the Jln Pasar market, where the most affected would be. A place where you will find most of the crimes one can think of, in spite of DAP being there forever to protect and take care of the needs of the people there.
(read the rest at 'meiyenn.blogspot.com)
Mr Chun Wai
Lets do the math on the effects of the price increase, say a family of 5 and 3 school going children....
Let the basis of culcation be on an household income of 3K,4K and 5K. Include the 18 odd% TNB increase and how it effects these households.... i dare not even think of the families who earn 2K and below, on how they are goin to manage.... God Bless All of us.
I'm certain you are a caring man, so lets give the nation a whiff of reality.
Didn't The Star also champion the cause of our Angkasawan?
why does our government always like to compare prices with other countries, and start saying.."ours is still the lowest...bla bla bla"
This is a no brainer comparison. If they really want to compare, please compare the per capital income over the price of petrol. For instance, if they want to compare the petrol price in Singapore (after conversion to Ringgit), which is higher, try look at their income (convert to Ringgit), and their per capita income...
I think those bunch of people who always say 'lowest in the region' has no experience in economics and has no right to run the country!
As mentioned, fuel price increase is inevitably as this is worldwide issue, but what our government should do is to increase and improve the living standard of the people by boosting the ecomonics and strengthening the ringgit (try to compare our ringgit with singapore dollar or even thai bhat - all has gone up !)
Your facts are misleading and downright questionable. Australia is not a net oil exporter.
Also, it is not fair to compare the cost of petrol with other countries in ringgit value.
The ringgit is not the standard in which oil is bought or sold. It should be in USD or the native currency of the countries that the comparison is made against.
Secondly, the total amount of money each person spends on fuel relative to the per capita income of the countries should be used as a basis of comparison. Your method of comparison is juvenile and does not address the issue that you are writing about.
Lastly, do you actually believe what you are writing? Or are you doing it so that you can continue to keep your high paying job?
we can scream, scold, hold street demonstrations,condemn our BN especially Pah Lak but I believe that even if Pakatan had formed the federal govt., the fuel price will also increase since it is a global issue.
Instead of focusing our energy on the petrol price increase, we should combine forces together to pressure our BN govt to table Petronas accounts in Parliament and make them public. Now, all their accounts are kept secret. Nobody knows how they earned their income and how they spent their money. The most common question now people are all asking is what is Petronas doing.
If our BN govt can satisfy this question, i believe most anger will vanish.
Australia is paying RM5.70 per litre of petrol but that is translated into about AUD2.3 at roughly AUD1-RM2.4 or so.... Hey we pay RM2.70 per litre now. Dollar for dollar its comparable, right?
Hang on,... wait a second,.. my cuppa starbucks in Australia does not cost me RM10 and a Toyota VIOS does not cost me RM8*,*** and my loaf of Gardenia grade wholemoeal bread does not cost me RM3 !
I agree that the petrol subsidy is not good economics in the long run but can we Malaysians at least have better planning when it comes to something so essential as petrol price changes?
Yesterday at my office cafeteria the prices of lunch has gone up instantly. Talk about 12midnite price changes.... my PanMee has gone up by RM0.50 and my chap-fun has gone up by RM1.00 !! even my barley water has gone up by RM0.40 overnight. And they say in a survey that pricing of food in Puduraya has not changed... try today !!
I'll hate to see Malaysia become another South America country whereby food becomes so expensive that people cannot afford to buy bread, rice etc for survival. I really won't want to see our RM become a pile of useless paper.
What will become of Malaysia in the next 2 years?
wait till this idiotic govt spends another US$65 million to buy the used capsule from the russians. and spend another US$65 million to retrofit the used capsule for more research and development. and spend another RM5 million on billboards to hail the Angkasawan.
Then, all of us will feel klike jumping down from the tallest building in Putrajaya. By the way, back of the envelop calculation suggest that construction cost for the completed Putrajaya condos todate were inflated based on current building material prices ( eg steel at RM4,000 per tonne against less than RM2,000 previously).
After all the leakages, this Government now comes running to us and say it cant afford the subsidies and needs the funds for development. Development? More like to fund the leakages. Fat cats need their daily feedings else they cant parade themselves if they look too scrawny?
this govt will not listen coz its too cocky having in power for 50 years uninterrupted. You want a Govt that listens and cares. Simple.
Kick out thsi corrupt Govt come the next election. Believe me, the price of petrol will come DOWN and not up.
Dr M's article gives an excellent perspective on the overall situation. A must read for all Malaysians. Appropriate for all mainstream media to publish in full.
(VERSI BAHASA MALAYSIA DI AKHIR ARTIKEL INI)
The price of crude oil has increased by 400 percent in the last three years. It follows that the price of products must increase, sooner or later. In other countries petrol prices had already increased. In the United Kingdom one litre of petrol sells for more than one pound sterling or RM7. In the United States it is about RM5.
That the price in neighbouring countries has gone up is shown by the rush to fill up by Thai and to a lesser extent Singapore vehicles.
The Government has now announced an increase in petrol price by 78 sen to RM2.70 per litre, an increase of more than 40 per cent.
I may be mistaken but there seems to be less vehicles on the road today. But obviously that is not all that will happen. All other consumer goods, services and luxury goods would increase in price.
The cost of living must go up. Put another way there will be inflation and the standard of living will go down.
Obviously our increase in petrol price is far less than in the United Kingdom or the United States. But our per capita income is about one-third of theirs. In purchasing power terms our increase is more than in the UK or the US.
The increase hurts but the pain is greater not just because of the increase percentage-wise is higher than in developed countries but because of the manner the increase is made.
A few days ago the Government decided to ban sale of petrol to foreign cars. It flipped. Now foreign cars can buy again. Flopped.
Knowing that in a few days it was going to raise the price and foreigners would be allowed to buy, why cannot the Government just wait instead of banning and unbanning.
But be that as it may what could the Government have done to lessen the burden on the people that results from the increase in petrol price.
In the first place the Government should not have floated the Ringgit. A floating rate creates uncertainties and we cannot gain anything from the strengthened Ringgit. Certainly the people have not experienced any increase in their purchasing power because of the appreciation in the exchange rate between the US Dollar and the Ringgit.
Actually the Ringgit has increased by about 80 sen (from RM3.80 to RM3.08 to 1 US Dollar) per US Dollar, i.e. by more than 20 per cent. Had the Government retained the fixed rate system and increased the value of the Ringgit, say 10 per cent at a time, the cost of imports, in Ringgit terms can be monitored and reduced by 10 per cent. At 20 per cent appreciation the cost of imports should decrease by 20 per cent. But we know the prices of imported goods or services have not decreased at all. This means we are paying 20 per cent higher for our imports including the raw material and components for our industries.
Since oil prices are fixed in US Dollar, the increase in US Dollar prices of oil should also be mitigated by 20 per cent in Malaysian Ringgit.
But the Government wants to please the International Monetary Fund and the World Bank and decided to float the Ringgit. As a result the strengthening of the Ringgit merely increased our cost of exports without giving our people the benefit of lower cost of imports.
This is not wisdom after the event. I had actually told a Government Minister not to float the Ringgit three years ago. But of course I am not an expert, certainly I know little about the international financial regimes.
I believe the people expect the increase of petrol price. But what they are angry about is the quantum and the suddenness. The Prime Minister was hinting at August but suddenly it came two months earlier, just after the ban on sale of petrol to foreigners.
If the increase had been more gradual, the people would not feel it so much. But of course this means that the Government would have to subsidise, though to a decreasing extent.
Can the Government subsidise? I am the “adviser” to Petronas but I know very little about it beyond what is published in its accounts. What I do know may not be very accurate but should be sufficient for me to draw certain conclusions.
Roughly Malaysia produces 650,000 barrels of crude per day. We consume 400,000 barrels leaving 250,000 barrels to be exported.
Three years ago the selling price of crude was about USD30 per barrel. Today it is USD130 – an increase of USD100. There is hardly any increase in the production cost so that the extra USD100 can be considered as pure profit.
Our 250,000 barrels of export should earn us 250,000 x 100 x 365 x 3 = RM27,375,000,000 (twenty seven billion Ringgit).
But Petronas made a profit of well over RM70 billion, all of which belong to the Government.
By all accounts the Government is flushed with money.
But besides petrol the prices of palm oil, rubber and tin have also increased by about 400 per cent. Plantation companies and banks now earn as much as RM3 billion in profits each. Taxes paid by them must have also increased greatly.
I feel sure that maintaining the subsidy and gradually decreasing it would not hurt the Government finances.
In the medium term ways and means must be found to reduce wasteful consumption and increase income. We may not be able to fix the minimum wage at a high level but certainly we can improve the minimum wage.
Actually our wages are high compared to some of our neighbours. The investors who come here are attracted not by cheap labour but by other factors, among which is the attitude of the Government towards the business community and the investors in particular.
From what I hear business friendliness is wanting in the present Government – so much so that even Malaysians are investing in other countries. There are rumblings about political affiliations influencing decisions. Generally Government politicians are said to be arrogant.
Malaysia is short of manpower. The labour intensive industries are not benefiting Malaysians. Foreign workers are remitting huge sums of money home.
The industrial policy must change so that high tech is promoted in order to give Malaysians higher wages to cope with rising costs of living.
The world is facing economic turmoil due to the depreciation of the US Dollar, the sub-prime loan crisis, rising oil and raw material prices, food shortages and the continued activities of the greedy hedge funds. The possibility of a US recession is real. In a way the US is already in recession. The world economy will be dragged down by it.
Malaysia will be affected by all these problems. I wonder whether the Government is prepared for this.
We cannot avoid all the negative effects but there must be ways to mitigate against them and to lessen the burden that must be borne by all Malaysians. I am sure the Government will not just pass all these problems to the people as the review of oil prices every month seem to suggest.
To The jackal: Wah..you are so filled with hatred for Dato Wong!!
He has already beeen pointing out a lot of bad things the government is doing, including the billboards and space tourists etc. The point on the Selangor bill board was a valid case in point that the new PR govt should not follow in the footstep of the BN govt. So now that brother Chun Wai has already started criticizing the BN govt, we should encourage him to do more of it, and not keep throwing stones at him. I don't like the BN, and I voted for the PR. But I am also never sure what they will eventually do when they come into full power. Like most humans, power corrupts. Even the good poor people can become corrupt and bad when they get into power. Maybe we should keep alternating the govt, so that previous-govt dirt is always brought up for airing by the succeedung govt.
I am in Australia and we pay $1.59 a liter now, what are you talking about RM5.70 a liter? AUD $1 is RM3.11!
either you cant calculate or you are just an exaggerator.
get your facts right!
BN-Barang Naik.That's a reality that all Malaysians must fathom.Words are eaten by our PM that promised not to rise the fuel price until August of 2008.
Afterall,all Malaysians are betrayed.We are all betrayed by the sweet promise of the highest-ranked leader,a leader that has no feeling of remorse over the political tsunami after the 8th of March General Election.We are betrayed by a leader who only knows how to aggravate the situation by making a poor yet stupid decision by increasing the fuel price.
Now,I have the reason to believe that the feeling of hatred of the rakyat towards the present government has reached a skyrocketing level.A level that is intolerable.In fact,the people has expected that will be a price hike.However,what makes them high in dudgeon is that "Why is it so fast??".It is the abrupt and inconsiderate decision that provokes their anger.
By making this decision,the present government has actually sent a clear message to the rakyat.The message will be "Don't vote us in the coming General Election but vote for THE OPPOSITION".
The argument that other oil net exporter countries like Oz (& those net importer developed countries like S'pore, UK, etc.)are paying higher price per liter than us is not that comforting if we take into account the fact that THEIR PER CAPITA INCOME IS 2 TO 4 TIMES THAT OF MALAYSIANS'! On top of that, DRASTIC removal of subsidies will give INFLATIONARY SHOCK to the economy ACROSS THE BOARD! If we take the NET EFFECT, this decision by AAB, SIL&Co. and his "BODOW-NOMICS" advisors is not the best of options... maybe to IMF neocons economists?
You are wrong when you mentioned that Australians are paying RM5.70 per litre of petrol.
How can you convert Australian dollar to Malaysian Ringgit? If you are staying in Australia, you will be earning Australian Dollars and enjoying Australian quality of life and as such, I really don't understand why is there a need to convert to Malaysian Ringgit. So, based on your figures, Australians are paying AUS$1.78 for petrol.
So, a dollar for a dollar, we are definitely paying more for petrol than Australians. Is this right??
Com'on Malaysians. Stop dreaming about cheap petrol. Sure, we should not be comparing petrol rates between countries. We should be comparing with crude oil price and the price for bringing it to market as "petrol" if we are refining the petrol in the country. And if we are importing the petrol, what is the cost of buying the petrol from the exporters. Every other comparison is bull shit. This is economics 101.
And as for the prices of the other stuff where we are subsidizing BN's cronies, we should demand a stop to it. We should stop subsidizing Proton, abolish AP, stop subsidizing the IPPs, stop subsidizing PLUS, KESAS, etc, stop subsidizing Bernas, etc. Stop paying to "consultants" and middlemen cronies when the govt buy fighter jets and submarines. Everything has to be at market price. Every procurement must be via open tenders. Or better still via "reverse tenders" where prices drop like a stone in a few minutes (learn it from Singapore) in open electronic bidding. We gotta stop all this "subsidy" bullshit. We have been subsidizing the cronies for too long.
Mr Chun Wai
This is taken fm another blog, it broken my heart, many many more stories like this that we arent aware of.....
saya yg paling terkena bila minyak naik ni....ini disebabkan saya berulang alik dari cyberjaya ke melaka. Skrang ni pun belanja minyak tol saya pi keje rm 1000 sebulan....itu minyak harga rm1.92 je....aku rasa klu dengan rate skrang ni rm 2.70 mau kat rm 1500 untuk minyak kereta je!!!! kerajaan bg subsidi rm625 setahun tu cuma belanja minyak saya setengah bulan.
isteri saya pun x sanggup tgk saya sakit poket ujung bulan, malam tadi beliau buat keputusan untuk berenti belajar. dan kami akan pindah balik ke Seri Kembangan ujung bulan ni. Satu keputusan yg amat menyedihkan, tapi kami terpaksa menerimanya. Nak duduk asrama, anak saya nak letak mana pula...tak terjaga. Satu keluarga menangis mlm tadi. isteri nangis sebab dia kena berenti belajar, saya nangis sebab terharu dengan keputusan isteri, anak aku nangis sebab tgk mak ayah dia nangis...terima kasih kerajaan malaysia....
Untuk keluarga yg One Man income mcm saya ni, sure banyak effek...
Tariff elekrik pun akan naik tidak lama lagi, berikutan diesel naik rm 1.....ahhh...malas nak pk apa lagi yg akan naik.
Australian paid RM5.70/litre of petrol . Have to bear in mind that they earn more than we do.
May GOD bless and guide this beautiful country.
I for one support the price increase. I feel that we Malaysians have been insulated from market forces for far too long. If we continue with the fuel subsidy policy, demand will only get larger and our reserves will be depleted sooner. Then what will we do? Datuk Wong, I think it is time your paper publish and educate the people on the oil economy. Did you know just how lucky we are? Do you knwo how much more Malaysian crude is worth on theopen market? Come by my blog and read about it. virtualmystic.wordpress.com
Billboards- yes check out the bill board infront of the National Library. Why would they want to welcome their minister with a billboard when it is his duty to visit the agencies under his ministry.
Your writings though more neutral now still show where your loyalty lies.
if they are gonna increase prices, then first just increase wages... like by ALOT! most malaysian workers are poor as shit! and politicians get to spend lavishly? screw them.
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