There was an argument that stated that Pertronas profits by reason of the increase of oil prices globally is more than enough to maintain the SUBSIDY --- and even if there was going to be price increases, it could have done very very slowly. With the increase of fuel price, which will translate to an increase of the price of everything -- and there being no changes in income -- there will be greater DESPERATION amongst the people, especially those who were just making enough to live month to month...(them "kais pagi makan pagi" people which I believe is a significant number in Malaysia). It is predicted that there will be MORE crime - the smaller crimes, the robberies without firearms, stolen motorbikes, cars, etc.. After all, by reason of inadequate wages, in Malaysia it is almost impossible to find many families with a sole bread winner. Most wifes/spouses have to work to make ends meet -- and because of that, we needed to get foreign domestic workers (now there are over 300,000 in Malaysia) because some one was needed to be at home when both parents are working.... Our development has been very lop-sided....and surely Malaysians can maybe "see it" but not really "feel it" or "experience it".
Would like to also share with you our fromer PM's comments on the increase of petrol/diesel price, taken from his blog (chedet.com.)
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.
S
aturday June 14, 2008
Canteen food costlier now
By ANN TAN
GEORGE TOWN: Pupils in some schools here have not been spared from spiralling prices – food in the canteen now cost between 10 sen and 30 sen more a plate.A check by The Star yesterday found that several school canteens in Penang started charging the new prices after the recent mid-year holidays.
While parents complain about having to give their children more pocket money, canteen operators claim they have no choice but to increase prices to cover costs.
Canteen operator Yeoh Leng Kee, 70, said he had maintained prices for years but was no longer able to do so without incurring losses.
Feeling the pinch: Students lining up to buy food at a school canteen in George Town on Friday. Canteen operators claim they have no choice but to increase prices to cover costs. “With the increased prices of flour, petrol and so on, I have had to raise the price of my char koay teow from RM1.50 to RM1.70. But I only did so after getting the school’s approval,” said Yeoh, who operates a canteen at a school in Green Lane.
Teh Chooi Pheng, 43, who sells economy rice, said she increased the price of each dish by 10 sen, adding that it would otherwise have been difficult to survive.
“We need to earn a living besides paying a monthly rental of RM300 to the school,” she added.
A roti canai seller, Khairuddin Mustafa Wan, 42, said his school canteen committee was meeting next week and he hoped they would allow the canteen to adjust prices to cover costs.
Year Five pupil Tan Qiao Yan, 10, said she tried to cut down eating at her school canteen by bringing food from home.
“My pocket money is limited, so I cannot afford to eat in the canteen too much now that the food costs more,” she said.
Student Nor Tasnim Abdul Aziz, 16, said her mother gave her RM100 monthly for food and it was not enough to cover the increase in prices.
A parent, Chew Soong Meng, 36, said the 20 sen to 30 sen increase was quite steep for school children.
A father of two school-going boys, Terrence Ng, said the price increase was reasonable but felt the food portion should also be increased.
“I have recently increased my sons’ pocket money to make sure they get enough food in school,” he said, adding that his two sons, aged 12 and 13, were big eaters.
Another parent, Quah Lean Hong, 49, said she disagreed with the price increase of canteen food as most families already had to put up with higher expenses following the fuel hike.
A senior staff member of a secondary school in Gottlieb Road said the school authorities had received a request from their canteen operator to raise prices and understood their plight.
“We still hope they will cooperate with us and maintain prices for the time being,” she said, adding that the school would discuss with the board the possibility of reducing stall rentals.
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