I received an e-mail from my dearest friend, the forwarded e-mail is still about the fuel price. I believed that you guys also interested to read about it, so I copied and pasted it here.
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WHAT IS NEVER MENTIONED
IN
Mainstream Medias are these facts....
IN
Mainstream Medias are these facts....
Malaysian PerCapita Income USD 5000 VS Singaporean PerCapita Income USD 25000
Further The Star made a comparison of prices in Thailand , Singapore and Indonesia .
For Thailand it is quoted at RM3.90/liter, however are they aware that in Thailand new cars are cheaper than Malaysia by RM10,000? They pay only one life time for their driving license? No renewal fee after that? Also that goes for road tax as well? And do The Star also aware that you can drive all the way from Hadtyai to Bangkok on a six lane highway without paying any Tolls ??!!
Whereas here in Malaysia you have to pay yearly renewal for road tax , driving license and TOLLS, TOLLS, TOLLS!!!
For Singapore how can you quote RM 5.20 ? Please quote in Singapore Dollars because they are earning in Sing Dollars. You might as well say Europeans are paying RM10/liter. RM5.20/liter = Sing $ 2.20/liter, still cheaper than Malaysia in view of fact that Singapore is not a crude oil exporter. Are you saying that you fill up petrol in Singapore by paying Ringgit?
In economy, dollar to dollar must be compared as apple to apple. Not comparing like durian in M'sia is much cheaper than durian in Japan!! Of course-lah, Japan is not durian producer!!! Comparing Malaysian durian with Thailand durian make more sense!!
For Indonesia we might say is cheaper there at RM2.07/liter but compare that to their level of income!
Now, let us compare the price with OIL PRODUCING countries:
UAE – RM1.19/litre
Eygpt – RM1.03/litre
Bahrain – RM0.87/litre
Qatar – RM0.68/litre
Kuwait – RM0.67/litre
Saudi Arabia – RM0.38/litre
Iran – RM0.35/litre
Nigeria – RM0.32/litre
Turkmenistan – RM0.25/litre
Venezuela – RM0.16/litre
MALAYSIA – RM2.70/litre
RM 2.70!!! Individual perspective:
As of last month a Toyota Vios would 'cause a damage' of about RM 89,000.
In the international market, a Toyota Vios is about USD 19,000
USD 19,000 = RM 62,700 (using the indicative rates of USD 1 = RM 3.30)
That makes Malaysian Vios owners pay an extra RM 26,300.
This RM 26,300 should be cost of operations, profit and tax because the transportation costs have been factored in to the USD 19,000.
RM 26,300/ RM625 petrol rebate per year translates to a Vios being used for 42.08 years.
I do understand that the RM 625 is a rebate given by the government, but it also means that one has to use the Vios for 42.08 years just to make back the amount paid in taxes for the usage of a foreign car. Would anyone use any kind of car for that long?
Now with these numbers in front of us, does the subsidy sound like a subsidy or does it sound like a penalty? This just seems to be a heavy increment in our daily cost of living as we are not only charged with high car taxes but also with a drastic increase in fuel price.
With all the numbers listed out, I urge all Malaysians to join me in analyzing the situation further.
Car taxation is government profit, fuel sales is Petronas' (GLC) profit which also translates into government profit. The government may ridicule us Malaysians by saying look at the world market and fuel price worldwide. Please, we are Malaysians, we fought of the British, had a international port in the early centuries (Malacca), home to a racially mixed nation and WE ARE NOT STUPID!!!
We know the international rates are above the USD 130/barrel. We understand the fact that the fuel prices are increasing worldwide and we also know that major scientist are still contradicting on why this phenomenon is happening. Some blame Bush and his plunders around the world and some blame climate change and there are others which say petroleum 'wells' are getting scarce.
Again we go back to numbers to be more straight fwd
1 barrel = 159 liters x RM2.70/liter = RM 429 or USD 134
On 1 hand, we are paying the full cost of 1 barrel of crude oil with RM2.70 per liter but on the other hand the crude oil only produces 46% of fuel.
Msia sells crude oil per barrel at USD130 buys back Fuel per barrel at USD134. And not forgetting, every barrel of fuel is produced with 2 barrels of crude oil.
1 barrel crude oil = produce 46% fuel (or half of crude oil), therefore
2 barrel crude oil = approximately 1 barrel fuel
In other words, each time we sell 2 barrels of crude oil, equivalently we will buy back 1 barrel of fuel.
Financially,
Malaysia sell 2 barrel crude oil @ USD 130/barrel = USD 260 = RM 858
then, Malaysia will buy back fuel @ USD 134/barrel = RM 442/barrel
Thus, Malaysia earn net extra USD 126 = RM 416 for each 2 barrel of crude sold/exported vs imported 1 barrel of fuel !!!
(USD 260-134 = USD 126 = RM416)
So where this extra USD 126/barrel income is channeled to by Malaysian Govt?????????
Another analysis:
1 barrel crude oil = 159 liters.
46-47% of a barrel of crude oil = fuel that we use in our vehicles.
46% of 159 = 73.14 liters.
@ RM 2.70/liter x 73.14 liter = RM197.48 of fuel per barrel of crude oil. This is only 46% of the barrel, mind you. Using RM 3.30 = USD 1, we get that a barrel of crude oil produces USD 59.84 worth of petrol fuel (46% of 1barrel).
USD 59.84 of USD 130/barrel turns out to be 46% of a barrel as well.
Another 54% = bitumen, kerosene, and natural gases and so many more.
And this makes a balance of USD 70.16 that has not been accounted for.
So this is where I got curious. Where is the subsidy if we are paying 46% of the price of a barrel of crude oil when the production of petrol/barrel of crude oil is still only 46%?
In actual fact, we still pay for this as they are charged in the forms of fuel surcharge by airlines and road taxes for the building of road (because they use the tar/bitumen) and many more excuse charging us but let us just leave all that out of our calculations.
As far as I know, only the politicians who live in Putrajaya and come for their Parliament meetings in Kuala Lumpur (approximately 60+ km) are the ones to gain as they claim their fuel and toll charges from the money of the RAKYAT's TAX.
It is so disappointing to see this happen time and time again to the Malaysian public, where they are deceived by the propaganda held by the politicians and the controls they have over the press.
Which stupid idiot economist equates rebates for rich or poor with the cc of the vehicles? An average office clerk may own a second hand 1300cc proton Iswara costing $7,000 (rebate = $625) while the Datuk's children can own a fleet of 10 new cars of BMW, Audi and Volvo all less than 2000cc costing $2 millions and get a total rebate of $625 x 10 = $6,250! Wow what kind of economists we are keeping in Malaysia...wonder which PhD certificate that they bought from...
Misleading concept of Subsidy:
The word "subsidy" has been brandished by the BN government as if it has so generously helped the rakyat and in doing so incurred losses. This simple example will help to explain the fallacy:
Example:
Ahmad is a fisherman. He sells a fish to you at $10 which is below the market value of $15. Let's assume that he caught the fish from the abundance of the sea at little or no cost. Ahmad claims that since the market value of the fish is $15 and he sold you the fish for $10, he had subsidised you $5 and therefore made a loss of $5.
Question: Did Ahmad actually make a profit of $10 or loss of $5 which he claimed is the subsidy?
Answer:
Ahmad makes a profit of $10 which is the difference of the selling price ($10) minus the cost price ($0 since the fish was caught from the abundance of the sea). There is no subsidy as claimed by Ahmad.
The BN government claims that it is a subsidy because the oil is kept and treated as somebody else's property (you know who). By right, the oil belongs to all citizens of the country and the government is a trustee for the citizens. So as in the above simple example, the BN government cannot claim that it has subsidised the citizen!
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As I reflected on what had happened , I also pasted a writing from chedet.com, a Weblog of Tun Dr Mahathir (TDM).
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Oil Price
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.
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Both articles make me interested to share it with you guys! What an amazing feeling, you agree?
Read it & Think about it!
It made me wonder- what is this thing is really about?