Subsidy = Opium??

Honestly I am not supportive of subsidy scheme, because I think it reduces competitiveness, creating false impression and sense of security to the receivers. In extreme term, subsidy can be equated as opium. It is addictive, and it is hard to shed especially if you are having it for more than 20 years. (Oil subsidy was introduced in 1982 if I remember correctly.)

Just look at the reactions by Malaysians after the ‘removal of oil subsidy’ (That’s the correct term. oil price hike is not :roll:). There is a group with the name ‘1 Million Malaysian who are sick of the RM2.70/liter Petrol Price‘ in Facebook and guess what, as of today – less than 1 week – a staggering number of 35,582 people already joined the group. That is roughly 5k new members a day, 200 members an hour, 3 member a minute!! I read somewhere that, less than 24 hours it was created, the group had some 1,767 members! It reminds me of the withdrawal symptoms associated with drugs, alcohol and nicotine. :arrow: This is a case of when one is hardest hit, one will arise to make noise, if the problem affects others, that individual may just care… less :vangry:

Oh, I heard many times “Politics is not important”, “It has nothing to do with me”, “I have no interest in politics”, “I couldn’t care less about politics, as long as I can cari makan enough”, well you get the idea. Yes, it is not important, I guess many still can ‘cari makan’ heh? The ruling government was elected through political process, and the very government that you voted in or could not care less to vote that made the very policy of reducing the oil subsidy last week. Job well done, ignorant retards!! This message is especially for those that:

1. Never aware of what shits are going on around them. Blur sotongs!! Fry them!!

2. Aware but too ‘busy’ to do anything.

Job well done, ignorant-irresponsible-lazy retards!!

I have nothing against those who voted for the current ruling government for they made their choice and they shall live by it. After all they already exercised their responsibility as a citizen and chose their side. :up:

Well, we come to the issue – oil subsidy. Do you think the government is telling the truth? That they can no longer subsidise the petrol? Is there anything we do not aware of? What is the government hiding, if there is anything to hide??

From Chedet, ‘Adviser’ of Petronas:

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.

Here are some conspiracy theories. :lol: Could the following events partially related bsides the current hiking of world oil price? Caution: Read for fun!

1. Petronas in RM8b deal – Under an agreement, Australia’s Santos and Petronas will form a joint venture to develop and operate a 450-km gas pipeline and an LNG plant at Gladstone, Queensland. The need of cash flow to pump into the buying of Santos so need to reduce the subsidy? Or the government is unable to negotiate new contract with Petronas on subsidy?

2.) FUEL PRICE HIKE: Oil exploration costs Petronas a bomb, says CEO – Petronas needs extra money for their exploration of deep water in Kikeh??

3.) Petronas starts methanol plant commissioning work – Petronas needs money to pay the contractors to erect this Labuan 2nd phase Labuan Methanol plant??

4.) Somebody dapat ilham (received divine intervention?) to ‘reduce oil subsidy’. Hahaha!

By all mean, wipe out the subsidy because it is good for the long term. Just it is too sudden for us the rakyat to absorb the after effects. Yes, reduce the subsidy but, be TRANSPARENT why you do it. That is what we as Malaysians want to know. So far, we were given half-baked answers, some downright stupid explanations! You justify the reduction of subsidy, if it makes sense why not? Quoting Chedet again:

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.

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.

Conclusion: I am not against the reduction of oil subsidy, but the manner it is made. I want good explanations. Make me understand. Do not shove funny numbers into my small brain. I have my numbers, like this:

Country GDP – per capita ($)
Hong Kong – 36,500
Malaysia – 12,700
Iran – 8,900
Venezuela – 6,900

Premium Unleaded petrol price in
Hong Kong is : 10.22 HKD per litre = RM 4.27 per litre
MALAYSIA is : RM 2.70 per litre

GDP ratio between Malaysia and Hong Kong is 12, 700 : 36,500 = 1 : 2.87
Re-adjust the petrol price based on income: RM4.27/2.87 = RM 1.47

==> Obviously, our RM 2.70 per litre is far more expensive than Hong Kong’s RM 1.47 after comparing both countries’ GDP. :shock: Wait.. Hong Kong is a net oil importer. Hmm.. their cars are cheaper too. Oh, in Hongkong having a car is a luxury, not a necessity like here in Malaysia :smile:

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No Responses to “Subsidy = Opium??”

  1. melbie wrote on Jun 10, 2008 at 3:45 pm

    :up: very well said, bong!

    I put a link to Tun Dr.M’s oil post in my Friday entry last week too… hehehe ..


  2. bongkersz wrote on Jun 10, 2008 at 3:47 pm

    i don’t really like the old man for certain things that he did during his tenure.. but damn he’s smart! that i admire 🙂 ➡


  3. angeles wrote on Jun 10, 2008 at 11:42 pm

    i was just wondering if he’ll kena tahan ISA.. 😆


  4. Padan Muka wrote on Jun 11, 2008 at 2:00 am

    Padan Muka for those who votes for BN in PRU-12


    pru-13 jangan lagi pangkah BN lah. ketuanan melayu??? ptui. dari mimpi lah ada ketuanan melayu. sudah 50 tahun, ketuanan BN-UMNO itu pasti ada.

    ada apa manfaat kepada melayu dalam 50 tahun ini? ya ada….. kroni kroni BN-UMNO sahaja yang ada. hidup senang, tak payah kerja sampai leway malam, tidur rumah mewah, kereta beratus ribu, hari hari makan udang, ketam, ikan, shark fins, ginseng. berbilion bilion ringgit di bank bank luar negara.

    melayu malaysia sahaja yang bodoh dan sombong selama 50 tahun dan tengah mimpi-mimpikan “ketuanan melayu” yang ditipu oleh BN-UMNO. tengok lah singapura, minyak takde, padi takde, apa pun takde. tapi wang lebih tinggi daripada kita. mana perginya wang petrol, beras, getah, balak dan lain lain export kita? kenapa kita masih di waktu 1960an???

    kita makan pun tak cukup kenyang dan sekarang kena bayar wang kita untuk kroni BN-UMNO untuk mereka savings bank di luar negara berbilion bilion ringgit.

    kita ada apa? ada, memang ada….. ada basikal, ada motorsikal, bank ada tiga ratus ringgit lebih sahaja, hari hari makan nasi lemak, nasi goreng, nasi telur…..

    siapa padan muka? siapa yang salah selama 50 tahun ini? kita orang melayu lah yang salah pangkah BN-UMNO selama 50 tahun ini. tengok pemimpin luar negara lain yang kaya, semua faedah untuk rakyat negara sendiri. kita terlalu jauh 50 tahun berbanding dengan mereka. yalah…… badawi selalu banding kita dengan burma, indonesia, thailand dan negara yang miskin dan tak ada petrol/getah export. tapi tak banding dengan pengexport petrol negara lain.

    sudah berapa kali petrol kita naik 5 tahun ini? kita pengexport petrol lah. tapi badawi berbanding dengan pengimport petrol negara lain. padan muka, bodoh, sombong lah macam ini.

    kita ada apa? kerja sampai lewat malam lah. makan tak kenyang lah. hidup susah payah lah, rumah sewa tak mampu bayar lah, motorsikal pun ditarik balik kerana tak mampu bayar bulanan.

    saya seorang melayu pun rasa malu. pukimak yang dikatakan oleh BN-UMNO ketuan melayu! ditipu hidup-hidup oleh BN-UMNO. pru-13 saya dan rakan-rakan, keluarga, bini semua mesti pangkah kerajaan PR. saya tak mahu ditipu hidup-hidup lagi. saya tak mahu sombong jadi ketuanan melayu lagi. ketuanan melayu ini mainan politik BN sahaja.

    kepada rakan-rakan semua yang baca komen saya, tolong tendang BN-UMNO keluar di pru-13 yang akan datang. ini bukan untuk saya seorang sahaja, tapi untuk semua melayu dan kaum-kaum lain yang hidup di malaysia tercinta ini. harap suatu hari nanti kita dapat hidup senang dan negara kita kaya.

    disamping itu, saya berdoa kepada allah, datuk seri anwar ibrahim dapat sokongan daripada sabah dan sarawak mp untuk menyelamatkan negara tercinta kita ini.



  5. NoktahHitam wrote on Jun 11, 2008 at 5:26 am

    Chedet? As I recall, he has selective memories.

    Anyway, Chedet is almost wrong. He doesnt take into account the exploration process, new infrastructure, new pipelines, logistics, vessels, equipments, corporate governance, sponsorships, outsource technical and royalties. He thinks oil is like Zam Zam water (neverending flow)?

    Agree. Remove subsidies BUT ONLY WHEN WE CAN AFFORD IT. That said, GET US A FUCKING MINIMUM WAGE! Macam ni nak compete globally? Pfff..

    I despise all the effort by Gov, MSC(especially, when all they do is invite international ICT companies), MDEC (no one wants to listen to big ideas), MARA (selective), worthless Corridors, MeCD (selective), Proton (still that piece of tin milo, and car tax protected them), Perodua+Naza+DRB Hicom (copycat) and the list goes on.

    Again, goin global? PFFTTT.. smell my fart lah.


  6. melbie wrote on Jun 11, 2008 at 10:29 am

    Yep, me too.. he had his share of ‘deeds’ during his time… even on his deathbed, my late Grandpa was still angry at him..he couldn’t recognise the family members sometimes and yet he managed to curse ‘that old man’.. imagine that… but he’s smart and he saved us many times, economically, hehehe


  7. zewt wrote on Jun 11, 2008 at 9:52 pm

    damn right… those who dont care about politics… they are feeling the heat!!!

    che det… seriously… he should have done more when he was around.


  8. bongkersz wrote on Jun 13, 2008 at 10:51 am

    yes, he’s smart.. hence i never believe him on ‘i don’t remember’ ‘i forgo’. selective memory. now it seems he is remembering everything 😈 scheming old man hhehehe!


  9. bongkersz wrote on Jun 13, 2008 at 10:57 am

    he is already.. with his condition and getting ISA-ed? 🙄 🙄


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