Tuesday, 10 June 2008

A nation living on subsidy

I guess the grumbles about the fuel price increase is not going to end anytime soon. It is quite difficult to reconcile the fact that we are an oil-producing nation but yet not able to sell it cheaply to our own people. The government has been saying that our petrol prices are still cheaper when compared to other countries, be it the region or worldwide. I'm sick and tired of hearing this lame excuse.

Firstly, if we want to compare, then we should do so against other oil-producing countries, say Brunei or Iran or maybe even Nigeria. My blogger friend Lucia Lai has a comparative price chart in her posting, here.

Secondly, we should compare ourselves with nations that have equivalent purchasing power. Former PM Tun Dr. Mahathir explains, `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.' Read his full post on this subject, here.

AAB's government says that they can no longer afford to subsidise the fuel price. But they will continue to help the rakyat by subsidising other things. Crap!

Actually, some time ago I had posted at an online forum discussion that I would quite agree the government remove the fuel subsidy. However, these savings should be returned to the rakyat by other means. It's all a question of budgeting and financial management; of income and expenses. Improve public transportation so that it becomes easy and convenient for the people to move about. Buy more buses, improve the trains, subsidise the ticket prices etc. etc. etc.

Also reduce the taxes and duties on cars so that more people can buy them. This would make the ownership of cars to be cheap but the running of it expensive. Car owners would then only use their cars for really important trips only.

I'm no expert on economics but I'm pretty sure there are better ways to use the profits that Petronas makes. Hosting an annual yacht race called Monsoon Cup is definitely not one of it.

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