Monday, June 9, 2008

Why I support the petrol price increase!

For the past two years during my classes, talks and seminars, I have on numerous occasions stressed that it is wrong for the government to have a blanket subsidy for petrol and diesel.

My logic is very simple. I do not agree with any blanket subsidy per se. The rich should not be subsidized for anything, period.

Let me put it in simple terms. For example, anyone who can enjoy luxuries like

RM 40.00 per hour foot or body massage,
RM 6+ coffee at Starbucks,
Eat at fancy restaurants,
Air-conditioning in the home,
Branded clothes,
Fancy hair cut or do,
Expensive hand phones and PDAs,
Smoking cigarettes and enjoying ‘happy hours’ at a waterhole,
Owns a car that is other than a small engine locally made or cheap second hand ones, etc

does not deserve a fuel subsidy. Anyone who thinks otherwise is naïve, irresponsible or plain selfish. Why should we be subsidized to indulge?

Subsidies should only be for the real needy: lower income groups, small business operators and start up companies. Accordingly 27% of Malaysians earn less than RM1000.00 per month. These people should be given direct subsidy not just to help them bear the additional fuel cost but also the probable increase in cost of living affecting from the new price of fuel.

It was a mistake that the subsidy was allowed in the first place. It is still wrong for the government to continue the current practice of subsidizing RM 0.30 per litre. The non-gradual manner of lifting the subsidy is also not very smart. But smart or not smart, the blanket subsidy is still wrong.

Ironically, while many Malaysians who are economically comfortable and passionate about the call to stop rich bumiputra students and businesses from getting government sponsorships and handouts; fail to see the subsidy for fuel that they themselves enjoy is pointing back at them. This is the classic example of the inability to be ‘honest on both sides’. We must not agree with any form of blanket subsidy, handouts and aid!

"Let each man direct himself first to what is proper, then let him teach others; thus a wise man will not suffer" The Buddha – Dhammapada 158

To be true, the next time we go and fill up petrol, feel guilty that we are still taking 30 sens per litre away from the real neediest!!!


Unknown said...

Hey dude, I enjoy reading your blog! About time huh? And yes, I am with you on the subsidy issue. Sigh...just not the way it was increased though...

Daniel said...

At the end of the day, it proves only one thing: lack of planning. (read: lack of thinking) You would think that such a big thing like this has gone through several steps of planning before implementation. It is rather cartoony to watch their usual pasteboard solutions that lead to nowhere.

Plus anyone who supports the petrol price increase usually can afford it in the first place, so to shout it out like that is not truly a statement, but a boast.

May I be rich, happy and healthy and earn my rights to boast like this.

my said...

Hemmm… agree with you when looking at the perspective that “The rich should not be subsidized” Can any body say how much is the saving for the removal of petrol subsidy will be from this group? One thing for sure petrol subsidy is benefiting the richer group. Because the richer they have the bigger car and most likely more than one car and the more petrol they use and that equates to more subsidy they will benefit.

I think the poor who uses very much less fuel daily compare to the rich man, does not benefit much from the subsidy, don’t you think so? Furthermore, lorries and busses also do not run on petrol they in fact run on diesel, but these group of people will take advantage on this situation for their own self benefits… So sad… always think about themselves not others, especially the poor..! They increase the price of food, fare and other basic needs. If 10 cent or 20cent increase, it is ok but 100% increased! This will burden the poor and maybe the middle income as well!

Thus, if the Government is genuine enough to help “rakyat”, I would suggest that the billions RM which are saved from the removal of subsidy could be used to subsidize the truly poor or build better public transport infra, education for poor, etc which in turn benefit to those who really need the subsidy !….

Just my humble opinion!

Vickki said...

Hmmm.... In my opinion, we earthlings asked for this to happen so we get it la.. Sooner having too much money with us will not help as we aren't able to eat it..
Earth resources are getting very limited and it's time for us to appreciate and be contented with what we have now. Pointless of us to keep on complaining and it's time for us to take action

~elisa~ said...

My thoughts.... =)
a long one btw..)

I think in the first place, it doesnt make sense to be paying premium for something that we can get inhouse.

Imagine in the future if your child (*wink*) wants to go for a traning and pays 10k to get it elsewhere, when he can get it direct from daddy - who is great at training. He can get it inhouse and at a cost, for him to appreciate it, but definitely not at a premium price, and from an outsider. Doesnt quite make sense for me. And this is the case for us. Not being able to enjoy something that is richly available inhouse. If exporting petroleum truly makes more moeny sense to the country, then more so, subsidy should be given, as the country has deprived its people of something good and cheap, in place of somehting more expensive.

Having said that, I agree that the rich should not benefit and the deserving are the poor. The fact is also that it's the middle class who suffers.

The poor are usually not in the city, driving a smaller car or a bike, no jams to worry about. Works 5-10 mins away from home. Erywhere is accessible. I can say all this cuz I grew up in a small town. We do less than 50k km in 5 years. Not much petrol spent there really. The poor in the city will prob suffer more. But that's not where the majority of the poor are, I'd think.

The middle class on the other hand.. if according to what you're saying, will not be getting subsidy.. and at the same time will not be earning as much as the rich as well to cover their expenses.

Sad to say, many foolish middle classes want to enjoy the luxuries of the rich - massage, spa, expensive phones and gadgets, branded clothes, expensive holidays. These ppl should be shot if they complain there's not enough to spend at the end of they day.

The truth is, there are middle class guys like my husband and I who do not spend excessively (no massage, no expensive gadgets,
no fancy hairdos, once ery two months of starbucks and fancy restaurants (ie TGIF, at most), DEFINITELY no branded clothes and
tobacco,and aircond... only on super hot days.. that also, on timer.)

Not to mention, a study loan to pay for, 4 retired parents & in laws to care for, a sis in law to put thru uni, and a child on the way.

Oh, and renting a house w tenants, to cut cost.

So, without subsidy, it'll definitely be more than a pinch in the pockets. Well, a punch would be more accurate.

I dont think anyone earning below 2k will be able to survive long as well, not to mention 1k. For a few years while they're single, yeah sure.

But it sure will cut into their savings for their future.

If you talk about the rich... well, who pays for their petrol anyways? More often than not, their company!

So at the end of the day, the subsidy, is for us. The rich will not feel the pain as majority of them don't pay for it anyways. So it really is to identify the rich and cut the subsidy, rather than the poor and give subsidy.

We can then say, companies should be taxed more! Well, who's at a loss, at the end of the day? Again, the middle and lower management group. Companies would cut bonuses and increment of those in that group, and definitely not of the EXCOs & CEOs.

Who loses out? US!

So the way I look at it, unless the govt is doing something to better the quality of living, reduce the cost of living (eg thru good & cheap public transport - promised but not delivered)

and somehow raise the wages (eg thru min wage - that would help the needy, FOR SURE. at lease minimise poverty - again, promised, but not delivered)...

Unless that happens, we'll alll, except the really rich, always be on the losing end.

Some loses because they're poor..

Some loses because they've commitments to family..

And some loses, and should lose, because of their folly in spending. But I believe with this group of people, desperation can bring a certain % of them to be wiser with $$. And some will remain foolish.

(I strongly believe in Everett Rogers 'Diffusion of Innovation' theory - Some will learn immediately, some in time, and some never.)

With the reduced subsidy, the govt should look at the bigger picture and have more things in place to protect the poor and the soon to be poor. Unfortunately, as a rakyat, I'm not seeing that being done. And to some extend, do not have much confidence that I'll see it being done anytime soon either.

dhena said...
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dhena said...
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dhena said...

Email from a friend

Firstly, whoever the wrirter of this piece shld take note of:

a) the fuel subsidy is not one that is subsidizing the rich, it is the direct opposite. The so called rich who consume or read guzzle petrol do so at their own peril and so much after forking out many times more upfront for the price of car. Do yr math on the acquisition cost of car here and its running cost for the next 5 yrs, against i) other net oil exporter and ii) against any other country that doesn't produce a single molecule of oil! - read Singapore and u will be shocked to find that we in Mlaysia, even the Protons and Kancils are at the wrong end, let alone the Benzers and Beamers,

b) Malaysia being a net exporter and the imported oil is of lesser quality, shld result in Petronas having profits, at today's price, its super profits. So where are their money. In fact if Petronas had brought all the oil sale money back to Malaysia, our Ringgit should be on par if not, better than Singapore's!

c) Why has the govt allowed the estates and heavily manualised sectors not to implement minimum wage? Even today, if it rains I don't think a rubber taper (the fewer Malaysians that exist in an estate now) can be entitled to full day pay! Why continue to bring in low value foreign labour turning our Industrial estates into the backyard manufacturing of the wealthy nations! Had minimum wage been introduced, many Malaysians would have been proud to be working in a "comfortably" paid environment, thus gaining their own self esteem and not wanting to find themselves classified as the lower income group. I am sure they will gladly pay thru petrol at any price, Firstly does the writer pay his staff at their skilled rate, instead of taking advantage ofprotection that the Govt has given the "employer's" who fit into the many luxuries as mentioned in the article below?

d) The long held racial policies under the auspices of NEP had helped many, this is a direct cause of many being ensconced into poverty, something they cant get out from. 80% of Malaysians have yet to visit Petronas Twin Towers, KLIA and the Putrajaya Disneyland, isn't this staggering itself? Cant that money be used to provide a permanent subsidy.

e) Petronas makes money over and above the Malaysian oil, where are these profits utilized?

Subsidies aren't entirely good, however this is not an ideal free market economy. So the notion shld have been seeped in slowly, however planning is not the domain of Malaysian public service or the Federal Govt of the day! So, ikut suka hati lah!

Honestly, looking on both sides? Yes, how many do pay their exact income tax? This is a much bigger amount compared to the 30 sen extra that one has to pay! So those feeling guilty, pay up the full value of tax, instead of buying properties, cars, holidays etc and taking advantage to charge yr expenses (personal ones) to yr own Sdn Bhd company!

Practice than preach.

Whoever forwarded this article to me, pls send this back to the original writer and pls, also send this to NST editor.


Tita W said...

i think the trickiest part here is how do we implement it. Subsidizing the poor over the rich. How do we define poor , is it by the size of the car or is it by the number of digits in their paycheck.

Should we introduce the smart card system which was recommended before (which i totally think its going to be abuse if its done). or should we gave rebate in the income tax (if they are really poor , they should not have to pay tax anyway).

So yes it is tricky to define and create a mechanism for the subsidy distribution.

My only concern on the after effect of the subsidy retract by pulling it out in one go (even though it is done gradually over a year) , it will only create sudden surge of services & goods price. In return this will be a burden mostly to low & middle income.

I think its no longer about whether we agree or not but how do we make the change and still achieving the main objective of the change.

Vann said...

di luar kotak :)

Unknown said...

Nicely written sir.