Petrol Increase – To Sum It Up

(pic from indiadaily.org)

Okay, ‘bertenang-bertenang’ hardly we see solutions come out from chaos, what chaos resulted in are mess, more mess and maybe even more mess. This is a national crisis, indeed true. The last thing we want our leaders to be at this time of crisis is panicking. Imagine yourself got tangled in ropes, while swimming in a pool, you will definitely be doomed if you pushed the panic button, and if the lifeguard also panicky type of person, well consider yourself ‘Arwah’. In this post, I will let you evaluate the way the so-called future leaders tackle this issue.

Our current Prime Minister, Abdullah Badawi who has his hand on Petronas account, announced a 40% increase in petrol and diesel price. He also introduced the restructured version of fuel subsidies which seems to be in favour of the less earning groups rather than the rich. Ok, we cried for two things after that result in or as a result of this announcement. One, we cried (read: menangisi) the 40% of petrol price rise which will burn 40% of total area of our pocket or wallets. Two, didn’t we cried (read: berjuang) for the need-based policy so the subsidy structure is well spot on. Why would he opt for this unpopular political moves? How is this approach will work in reducing the burden of the poor and at the same time satisfy the well-to-dos? When Prime Minister was asked on the increase, this is what he answered..

” Tinggi-tinggilah, tapi taklah tinggi sangat, walaupun harga (bahan bakar) naik, kita beri rebet, itu mengurangkan beban (rakyat), membantulah juga”

The way I see this is as below;

1. The increase is imminent, since the global price of oil per gallon has gone up by 400% ( so far the increase of petrol in Malaysia for the lowest price (1994) until now is about 55%).

2. Measures are taken to meet the possible burden for the lower income groups i.e the subsidy plan.

3. The rich must be prepared to pay more for fuel and if they choose not to, change to a lower c.c car which use less petrol. Can you compare a Bugatti or Ferrari fuel consumption with a Kelisa or maybe Kancil. The rich are enjoying the most out of our previous subsidy plan (which supposed to be for the benefit of the poor)

4. A constant 30cents discount from the retail price to be imposed and petrol price is to be evaluated monthly. If there’s a decrease in global price, Malaysia will follow and vice versa.

Our only living former Prime Minister Dr Mahathir Mohammad in his blog suggested this.

“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.”

He foreseen a possible problem which will result by a hike in petrol price, the cost of living will increase and the standard of living will go down. As an adviser to Petronas, he also mentioned that Malaysia produced 650k barrels per day, of which 450k is used internally, and the rest 250k is exported. By saying that we are a nett exporter of oil. Nor Mohamed , the second Minister of Finance said this, for every 1USD increase in price per barrel of oil, we (Petronas) will earn USD250m. Mahathir came out with this simple calculation.

“Our 250,000 barrels of export should earn us 250,000 (unit barrels) x 100 ( USD increase in price per barrel ) x 365 (days in a year) x 3 ( conversion rate from USD to RM) = RM27,375,000,000 (twenty seven billion Ringgit)”

And he further stressed that, government is flushed with money. He suggested and criticized a few steps taken by the current government, since Abdullah has said, he can’t satisfy everyone, obviously Mahathir is included.

Mahathir’s Critics

1. The manner and quantum which the increase is imposed.

2. Unfloating the ringgit due to satisfy IMF and World Bank.

3. On business shying away from Malaysia. “There are rumblings about political affiliations influencing decisions. Generally Government politicians are said to be arrogant.”

4. In purchasing power terms our increase (petrol) is more than in the UK or the US.

Being a responsible blogger, who knows how to critic and to suggest at the same time, this is what a man who had been in office for 22 years offer to the current government. Points for critics complement the suggestion number. ( suggestion #1 for critic #1 )

Mahathir’s Suggestions

1. “I feel sure that maintaining the subsidy and gradually decreasing it would not hurt the Government finances.”

2. Suggested not to unfloat Ringgit to the government, but not followed. (Nothing much to be done now)

3. 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.

4. In the medium term ways and means must be found to reduce wasteful consumption and increase income. Although we can’t increase maximum wage, we can improve the minimum wage.

However, even he’s being rough on Abdullah’s administration nowadays, Mahathir knew that this is a crisis that Abdullah didn’t invite and the burden should not be put on his shoulder. He has his confidence in this government as he finished his article on oil price.

“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”

My calculations

1. From Tun’s calculation, additional profit for Petronas due to USD100 increase in global price result in RM27billion.

2. Until this month, government had already spend RM26billion on petrol subsidy (which is also benefited Singaporeans, Thais, Philippines and smugglers)

3. Should this continue, where else will the government get another RM26billion to subsidize for another 6 month?

4. From the sales in the country, yes Petronas will profit but of course at a discounted value, we should consider the projections of the company in long run, the viability, and the sustainability. Petrol subsidies must go eventually, though i don’t know when.

5. All burdens on Petronas shoulder? Since Petronas only 100 percently benefited from a third of its daily production with increase in global price, I think it’s unfair and dangerous to the company.

I will not be complete if we do not take what this Prince in UMNO says about this issue. He led Petronas to success before, he was Minister of Finance, and most of all he was eyeing for the PM’s seat as well. YM Tengku Razaleigh is known more for his economic background more than his political career. In his blog. Though i have to clarify here, this article is written by sinatra_z, maybe his supporter or the blog’s coordinator.

“Memang benar Petronas semakin untung apabila harga minyak naik, malah ada yang mengatakan Petronas tidak perlulah untung besar sangat. Akan tetapi jika difikirkan kembali, katakanlah kerajaan membelanjakan sebanyak RM 35 Billion untuk menampung kos Minyak pada tahun 2008, kerajaan juga akan terpaksa mengeluarkan jumlah yang sama (sekiranya tidak lebih) untuk menampung subsidi minyak untuk penggunaan tahun hadapan.”

“Dan sekiranya tiada perubahan harga minyak yang pastinya pengguna kenderaan negara akan terus menambah lagi permintaan minyak dengan pembelian kereta baru dan kereta mewah yang banyak menggunakan minyak.”

“Sekiranya wang minyak tahun ini digunakan untuk membina contohnya Jambatan, Sistem pengangkutan atau hospital pada tahun berikutnya kerajaan tidak perlu membelanjakan jumlah wang yang sama untuk membina kembali benda-benda berkenaan. Wang subsidi tahun hadapan akan dapat digunakan untuk membuat benda lain.”

Certainly, this will answer for those who think the solution for the increase in global price is to use Petronas profit. But everyone has their own point of views. Indeed, one thing we should know that, government estimate this year budget based on last years expenditure, thus the budget (read: subsidy) for next year will pretty much determined by what has been spent ( RM28 billion and counting..) this year. Since last year we only spent less than RM10 billion (maybe but surely a lot less than now) for subsidy, surely the budget for other things will be affected in one way or another.

Continue reading this article here

My take on this

1. Since I’m not sure this article is written in the knowledge of Tengku Razaleigh or not, I will not take this as his personal view.

2. But I appreciate the explanation on the need to look at the priority of the nation. If we prioritize the middle class, upper class who apparently have more cars and travel more, the poor will perish. Those in kampungs and in the rural in Sabah and Sarawak travel on foot still. They don’t benefit a single cent from this subsidy.

3. If you continue reading this article, there is a list of what this government had done wrongly. Bottom line is, the government has to lead by example. Cut on the unnecessary spending. Buildings not need to be state-of-the-art all the time. Back to the basic of the need for a building, as a shelter not an art exhibition item.

Okay, now that’s from one side point of view. The government’s side we can see a differences in the way of measures and actions that will be taken in addressing this issue, which sometimes is good as far as the blessing with differences in ideas and approaches is concerned. But when it comes to nation’s sake, one approach is to be taken, of course with alternative plans should this action unworkable. From the government’s point of view, decision has been made, and all efforts should be taken to make sure the plan works well, and constant evaluation and assessment needed in short term to ensure need of the poor is well addressed and the negative effects is not affecting too much on those who did not enjoy this subsidy.

The reason why i leave the comments on what the opposition leaders will take on this issue is because, all of them seems to be united in the sense that they only opt for one action. Which is to demonstrate so that the government lower the price of the petrol. Well not to be bias or whatsoever, I think the world accepted that the petrol price is increasing day by day. It’s 400% more now for god sake, I myself don’t see the petrol can be much lower than Malaysia can offer now. However let’s see what the wisdom of opposition leaders on this issue.

From DAP point of view. Let’s demonstrate! Lim Kit Siang in his blog ask people to gather in KL and Ipoh to demonstrate today. Okay nothing happened today, no harm or rough actions by Police, so this demonstration is a failure. And that’s all from Lim Kit Siang.

I will say..

1. Demonstration is one of the way to express dissatisfaction. True but it might not be the first thing in mind for a people that deemed to be the next leader in government in waiting.

2. Is protest and demonstration the only ‘weapon’ for DAP to bring down government. I reckon debate on this issue will be more educating than organizing a way to fuel the anger of the rakyat on the government.

3. This issue is a global issue. Why it is isolated to BN’s government only? We must act responsibly and be fair to the government, maybe a warning through debates, ceramahs and meetings is much more acceptable.

4. Updated in his blog, he’s lamenting on the need of this petrol issue to be discussed in parliament before. I’ll refer you guys to this article from agendadaily.com, which can be read here ( Title: Pembangkang tak sebut pun pasal harga minyak)

5. No attempt to offer alternative action that could be taken

Now let’s see from the PKR’s point of views, Wan Azizah says rakyat tertipu, and the AMK youth leader calls for protests nationwide. Maybe the opposition realized that they are near to be federal government as a result of GE12. However can PR accept that they are not the government as yet, they have a very strong voice in the parliament, though. So why bring this to street? Why jeopardize others safety, and at the same time denies human rights of other who may not agree with demonstration. Bring this to the right channel, and parliament is the channel. However for political mileage and political motivation, any action that seems to be against the government must be grabbed and taken. Opportunist at its best, straight from the teaching of the de facto leader.

Anwar Ibrahim, meanwhile told the rakyat before the election, if they take over the federal administration, the petrol price will be reduced. But how? Is there a plan? If there is, what is it? How is it going to be achieved as long as Petronas can sustain, other sectors of economy is well taken care of, other incomes of country is not affected, and most of all how are you going to do that in times when global crisis hit each and every countries in the world? Maybe that promise is too good to be true? If Anwar can lay down his plan, discuss with and explain it to the people, I’m sure the BN government is long gone on the 9th of March 2008.

PAS, on the other hand. likes it big. They are not planning to do a small protest but one protest bigger than BERSIH is planned on 12th of July. The signal sent to the people is wrong, demonstration will not lead to a solution. Demonstration is a desperate act as if you have nothing to lose. The opposition is already strong in the parliament, fight in the parliament. Don’t bring it to the street. Berdakwah secara hikmah, isn’t that the motto? By saying the word hikmah, it means wisdom, and demonstration is anger, I bet you the word anger does not explain the word hikmah at all.

Those are all that i can discuss here with excerpts from suggestions and opinions from leaders be it from opposition or government. I can summarize my points as followed;

1. We can’t just manipulate people’s anger to gain political mileage, nor we can cause people’s anger without engaging the people explaining why such action is taken.

2. Demonstration is no the priority since there is more righteous, safest, more clever way to bring this issue. A two way communications is in Dewan Rakyat. Demonstration is a one way communication, there won’t be any respond from the government maybe from the law enforcers (which is highly invited to give publicity to the demonstration). This is not the way of solving a problem, a matured way.

3. Price increase is directly affecting people’s money. Must have a very very good reason why such action is taken. Transparency is a must. Action plan must be discussed at lowest level, so that rakyat will know and maybe can help the government of course only after they have a better understanding of this issue

4. Anwar Ibrahim, if you have the magic trick to solve this issue, should you keep it to yourself and wait for another 3/4 years for GE13 and let the people suffer along the way. Or are you waiting to hijack the government than impose your plan? Most of all, is there such a plan?

5. Political leaders must urge the people to be reasonable and consider this action from the government. Allow time to assess this action, and not jump straight to conclusion that this is unworkable. Thoughts has been put before agreeing on this action. Will it work? Let’s see.