Petrol Hike|Two Price Structures for Petrol from May 1

Effective from May 1, Malaysians and non-citizens will have to pay different petrol prices as foreigners are not eligible for subsidised petrol, Domestic Trade, Cooperatives and Consumerism Minister Datuk Seri Ismail Sabri Yaakob announced today.

Mind you, Not all Malaysians will get to enjoy subsidised petrol as it will follow the engine capacity and other factors such as socio-economy!

Once introduced, it may be compulsory for petrol purchasers to show or use their My-Kad.

This look very Complicate.

We need get more details on this. Further information on the new structure would be announced on May 1, 2010.

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If we have to pay the Market Price for Petrol then our Car Price also should be based on MARKET PRICE as well!

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petrolpriceincrease Petrol Hike|Two Price Structures for Petrol from May 1

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Two price structures for petrol from May 1

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There will be two price structures for petrol from May 1 — one for Malaysians and another for foreigners — Domestic Trade and Consumer Affairs Minister Datuk Seri Ismail Sabri Yaakob said on Thursday.

For Malaysians, the price of petrol will also be based on engine capacity, which means that not all would be entitled to subsidised fuel, he added.

Different petrol prices would be introduced for different groups of Malaysians, Ismail told a press conference here on Thursday after launching the new corporate identity of the F&N Soft Drinks Division.

Amongst the things that would be considered are the engine capacity of vehicles and socio-economic factors, he said.

He said that the subsidy for petrol would be retained but only targeted groups would receive the subsidy.

“The categories will then be divided into sub-categories such as the engine capacity of the vehicles used and other factors such as socio-economy,” he said.

“For RON95 petrol, the Goverment’s subsidy is 30sen per litre now. The current price of RON95 petrol is RM1.80 compared to the actual price, which is RM2.10.

“So, Malaysians who are not eligible for the subsidy and also non-citizens will have to pay RM2.10 or more,” he added.

Besides introducing the new structure, the ministry also plans to make the usage of My-Kad compulsory when buying petrol to identify one’s nationality.

“We have Thai nationals who drive into Malaysia to fill up their tank as they don’t receive any subsidy, which makes petrol such an expensive commodity there,” he said.

Further information on the new structure would be announced on May 1, 2010.

Umno deputy youth chief Khairy Jamaluddin, who first broached the subject in 2007 when debating the economic resolution before the last general election, had said that the subsidy must reach only the people who most needed it.

The current method was tantamount to a misallocation of funds, he had said.

Meanwhile, the subsidies on flour, sugar and gas would be retained, announced Ismail.

“Although the price for sugar has increased by 20sen, the Government is still footing the 80sen subsidy on sugar,” he said.

Ismail later conducted spot checks on several stores and eateries in the area to check on whether they had increased the price of food items after the increase in sugar price.

He said that the 20sen increase in sugar price should not be taken advantage of by food outlet operators.

“Food outlet operators should not regard this as an opportunity to increase the prices of food items,” he said.

from:thestar.com.my/news/story.asp?file=/2010/1/7/nation/20100107160536&sec=nation

 

petrol shell Petrol Hike|Two Price Structures for Petrol from May 1

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Foreigners, and some M’sians, to pay more for petrol come May 1

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From May 1, Malaysians and non-citizens will have to pay different petrol prices as foreigners are not eligible for subsidised petrol, Domestic Trade, Cooperatives and Consumerism Minister Datuk Seri Ismail Sabri Yaakob announced today.

“Currently everyone enjoys the subsidy, including foreigners. From May 1, the purchase of petrol using My-Kad will be introduced, whereby only citizens will get the subsidy,” he said.

To further complicate matters, not all Malaysians will get to enjoy subsidised petrol either. An announcement on the detailed mechanics of the system will be made on May 1, the day it goes into effect.

“Under the citizens category, there will be sub-categories where only targeted groups will get the subsidy,” he said after officiating the launch of a new corporate identity for Fraser & Neave Holdings Bhd’s beverage division.

He said the petrol subsidy for those who qualify will be based on the engine capacity of their vehicles. The focus will be on those with lower income who also usually use cars with smaller engines, he said.

Ismail said the government currently subsidised 30 sen of the RON 95 fuel cost. The original price of RON 95 is RM2.10.

“Therefore, the price of subsidised RON 95 is RM1.80.”

Under the new system, Malaysians who don’t qualify and foreigners will pay RM2.10 or more for RON 95, he said, while those who qualify for the subsidy will pay RM1.80.

Ismail said the government might also impose tax on foreigners, up to an amount which is to be determined by the Finance Ministry.

Besides oil, the government currently also subsidises gas, flour and sugar.

Ismail also said that while sugar price had been increased by 20 sen, the government still provided a subsidy of 80 sen for the item.

“Last year, the government provided a subsidy of 60 sen per kg, but due to the drastic rise in world sugar price from August last year, the government had to bear a subsidy of RM1.00, and that is why we increased the price,” he said.

With the 80 sen subsidy given, the government will be bearing a subsidy cost of RM1.008 billion this year compared with RM720 million last year. – Bernama

from:themalaysianinsider.com/index.php/malaysia/48828-foreigners-and-some-msians-to-pay-more-for-petrol-come-may-1

34 Responses to “Petrol Hike|Two Price Structures for Petrol from May 1”

  1. I wonder what socio-economy that is referred to.

  2. Fuel price by car size
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    The bigger your car, the more you will have to pay for petrol from May 1.

    This is because the Government is going to change the way fuel is subsidised.

    It is planning for a fuel pricing mechanism that will ensure only targeted groups, particularly those from the lower-income, will receive fuel subsidy.

    Also, foreigners who drive into the country to fill up their tanks will not be eligible for subsidy and will have to pay more for fuel.

    “The bigger the engine, the higher petrol will cost,” Domestic Trade, Cooperatives and Consumerism Minister Datuk Seri Ismail Sabri Yaakob said yesterday.

    The move was based on the assumption that those in the lower income group would normally drive a car with a lower engine capacity and thus be eligible for the subsidy, he said.

    “For RON95 petrol, the subsidy is 30 sen per litre. The current price of RON95 petrol is RM1.80 compared with the actual price of RM2.10.

    “Malaysians who are not eligible are those who drive a higher engine capacity car or non-Malaysians. They will have to pay RM2.10 or more for RON95,” he told a press conference after launching the new corporate identity of the F&N soft drinks division here yesterday.

    Besides introducing the new structure, the ministry also plans to make the use of MyKad compulsory when buying petrol.

    “There are some Thai nationals who drive into Malaysia to fill up their tank because petrol is such an expensive commodity in their country,” he said.

    In Muar. Deputy Prime Minister Tan Sri Muhyiddin Yassin said the Government was in the final stages of drafting a policy on the fuel subsidy which will be a “win-win situation” for both the Government and the people.

    He said that the new policy would identify people who were eligible for subsidy.

    Umno Youth chief Khairy Jamaluddin had previously broached the subject about giving petrol subsidy to the right people. He said the subsidy must reach only the people who needed it most and giving subsidy across the board was a misallocation of funds.

    On the subsidies for flour, sugar and gas, Ismail said they would be retained.

    “Although the price for sugar has been increased by 20 sen, the Government is still providing subsidy for the commodity,” he said.

    Ismail food outlet operators should not take advantage of the increase in sugar price to mark up the price of their products.

    “Food outlet operators should not regard this as an opportunity to raise prices,” he said.

    fr:thestar.com.my/news/story.asp?file=/2010/1/8/nation/5431667&sec=nation

  3. Do this Fomca secretary-general consider the implication of non-subsidised petrol price?

    Wean us off subsidies, says Fomca
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    Petrol subsidies should be removed gradually and the quantum of the increase in pump prices should not be too big, Fomca secretary-general Muhammad Shaani Abdullah said.

    He also suggested that the Government allow a monthly quota of 200 litres of petrol for each motorist regardless of the car engine capacity.

    “Make them pay the non-subsidised price only if they use more than 200 litres a month. This will let people know the true cost of petrol.

    “The increase in petrol prices should be by a few sen and it must be done slowly so as not to burden the people,” he said.

    Muhammad Shaani explained that if petrol price was to be determined by engine capacity, it did not necessary mean that the subsidy would reach the poor.

    “Having too many variables in a system would open it to abuses. How is the Government going to implement such a system? You want a simple system and not a complicated one.

    Umno Youth chief Khairy Jamaluddin welcomed the Government’s move to ensure that fuel subsidies be enjoyed by those who deserve it.

    “The subsidies should be made available to motorcyclists or people who drive Proton Sagas and Kancils,” he said.

    Malaysian Automotive Association president Datuk Aishah Ahmad said a thorough study on the fuel subsidy mechanism should be made to avoid any glitches.

    “The most important thing is to be fair to all parties, regardless of whether one drives a luxury car or otherwise,” she said.

    fr:thestar.com.my/news/story.asp?file=/2010/1/8/nation/5433607&sec=nation

  4. Businessmen upset over new petrol subsidy scheme
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    Local businesses are upset over the recently announced petrol subsidy scheme, which would require those with bigger engine capacities to pay a higher price for petrol.

    Johor Baru Chinese Chamber of Commerce president Loh Liam Hiang said the ruling was unfair as people with bigger vehicles were already paying higher road tax.

    “Those who drive 2.8 litre cars pay more than RM4,000 yearly in road tax,” he said yesterday.

    “This new ruling will burden them even more as these cars already consume more petrol.”

    Loh said the ruling would result in double standards, as all Malaysians would not share in the benefits from the petrol subsidy.

    On Thursday, Domestic Trade, Cooperatives and Consumerism Minister Datuk Seri Ismail Sabri Yaakob announced that the Government was planning a fuel pricing mechanism to ensure that only targeted groups, particularly those from the lower-income, would receive the fuel subsidy.

    Malaysian Indian Business Association president P. Sivakumar said the ruling was not fair to businessmen, who tend to drive bigger cars, as not all of them are rich.

    “Businessmen drive big cars because it can create a perception of success.

    “However having a big car does not necessarily mean that one is rich and able to pay more for petrol,” he said.

    fr:thestar.com.my/news/story.asp?file=/2010/1/9/nation/5439374&sec=nation

  5. New fuel pricing may trigger decline in luxury auto purchases
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    Sales of luxury cars will decline with the new ruling that cars with bigger engine capacity will pay more for fuel, say car dealers.

    Proton showroom manager Abu Bakar Ahmad said many customers were holding back purchasing the Perdana due to the recent announcement.

    “I hope the 2,000cc Perdana will be exempted from the new ruling. Currently, the Perdana is doing quite well because it is not as expensive as foreign models with the same engine capacity.”

    Abu Bakar also explained that any ruling should be in the best interest of national cars.

    Naza Kia Sdn Bhd assistant sales manager Adha Idzuan (pic) said most of its customers preferred fuel-efficient vehicles.

    “It doesn’t matter if they are purchasing big cars or small ones, everyone is feeling the pinch paying for petrol.

    “The new ruling will definitely affect the sales of cars with bigger engine capacity,” he said.

    However, Mutiara Motors Sdn Bhd assistant manager Mohd Effendy Abd Razak said the drop in sales would not be so evident for high-end luxury cars.

    “Our customers are also conscious of prices but they purchase expensive cars because it is their passion.

    “It usually means that they have the money to cope with any petrol price increase,” he said, adding that high-end cars cost between RM110,000 and RM600,000.

    fr:thestar.com.my/news/story.asp?file=/2010/1/10/nation/5445099&sec=nation

  6. Clear the air over petrol subsidy
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    I REFER to the recent report that beginning May 1, there will be no petrol subsidy for non-citizens and foreigners. The Government needs to clarify explicit­ly what is meant by foreigners and non-citizens to avoid confusion and possible anomalies later on.

    Many foreign-owned companies in Malay­sia have in their employment foreign expatriates who are accorded Employment Passes and Visas by the Malaysian Immigra­tion Department subsequent to obtaining approval from Mida when they set up their plants or companies here via Foreign Direct Investment (FDI).

    And they are regarded as residents by the Inland Revenue Board (IRB) if they are in the country for a minimum period of 180 days per year and these foreigners pay income tax to the IRB every year.

    Likewise, we have foreigners who are permanent residents here via the Malaysia: My Second Home (MM2H) scheme.

    I hope the Government will take a serious view of these categories of foreign residents and their legal spouses and dependants to avoid discouraging the inflow of FDI and dispel any possible negative perception towards the MM2H programme.

    BN,
    Kepong.

    fr:thestar.com.my/news/story.asp?file=/2010/1/13/focus/5449011&sec=focus

  7. New rules to limit amount of petrol a vehicle owner can buy
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    The Government is likely to put a cap on the amount of subsidised petrol a car owner can buy monthly, when the new petrol pricing mechanism starts on May 1.

    Without a cap on the amount for each car, those eligible for the subsidised petrol would “definitely abuse it,” said Domestic Trade, Co-operatives and Consumerism Minister Datuk Seri Ismail Sabri Yaakob.

    “They will buy as much petrol as possible and transfer it into a drum or somewhere, and then sell it to those who are not eligible.

    “Those living near Thailand will sell it across the border,” he said in an interview yesterday.

    Ismail Sabri said the Government was still discussing how much the limit should be and said this would be revealed to the public when it was fixed.

    He admitted that those travelling long distances frequently and had no transport allowance might lose out due to the monthly cap.

    However, there were others who would stand to gain, such as those driving small cars, living in small towns and working close to where they live.

    The Government recently announced that it would fix a two-tier pricing system for petrol, depending on engine capacity, while foreigners would have to pay the market price.

    Currently, the Government is subsidising petrol at 30 sen per litre for all. The market price for RON 95 is RM2.10 per litre but because of the subsidy, the pump price is only RM1.80.

    Ismail Sabri said a person would be eligible for subsidised petrol for only one car.

    He said, however, that if the cars were registered to different people, like the owner’s wife or children, then each would be eligible for the subsidised petrol.

    On whether there would be two different pumps (subsidised and not subsidised) at petrol stations, he said that would not be the case; instead the pumps would have two prices or just the market price but those entitled to the subsidised price would pay less.

    The Government was also looking at inserting a chip into the MyKad with information of the car, so that those eligible could swipe their MyKad for subsidised petrol.

    The new pricing mechanism would apply only to the peninsula in the initial phase but it has raised many questions with few answers.

    In Butterworth, DERRICK VINESH reported that Ismail Sabri said the archaic Hire Purchase Act would reviewed to protect car buyers from being harassed by car repossessors and finance companies.

    “The laws at present seem to favour the banks and finance companies rather than consumers.

    “Under the 1Malaysia concept, the people come first,” he said after opening the Consumer Awareness campaign at Sunway Carnival Mall Seberang Jaya here yesterday.

    The other Acts also to be amended were the Copyright Act; Consumer Protection Act, Price Control Act and Direct Selling Act.

    “We hope the Acts can be amended and passed in Parliament by the third quarter of the year,” he said.

    At another function, Ismail Sabri said amendment to the Copyright Act 1987 would make owning even one copy of a pirated VCD or DVD an offence.

    fr:thestar.com.my/news/story.asp?file=/2010/1/17/nation/5490845&sec=nation

  8. Questions and comments about the system
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    > If one can only receive fuel subsidy for a lower capacity (cc) car, what’s there to prevent those who own two cars – one luxury and one cheap – claiming the subsidy on the cheaper car and using the fuel for the expensive car?

    > If they are going to introduce the two-tier pricing system, I will fill petrol in my wife’s smaller car and then siphon it into my car.

    > Who is going to monitor the price at the pump to prevent abuse? What about the huge majority who use credit cards? Isn’t this going to be a big strain on petrol stations?

    > Isn’t the process of linking the car type to the MyKad a hugely labour-intensive pro­cess? We all know of the long queues daily at the Registration Department. Will the Govern­ment ensure that the entire nation’s registration process will be expedient? What if I upgrade/downgrade my car – will I have to wait months before the change is registered in the MyKad?

    > Rather than using a system that is open to abuse (dependent on capacity), why not add a loading charge on road tax corresponding to the actual value of the car? This way, people with expensive cars will pay more, not cc-dependent. Alternatively, embed all the information (car price, cc) on bar code/RFID tag on the road tax. Each sale will require a scan to determine the price.

    > One way to reduce amount spent on subsidies is to reduce nationwide consumption – where are the incentives for low cc, economical or hybrid cars? Shouldn’t the Government be encouraging economical use of fuel? I do not agree with the point that the lower income group who use a lot of petrol will be burdened if there is a cap on the amount of subsidised petrol. You use more, you pay more.

    > How are they going to work it out for hire cars? Malaysians working away from their base do hire cars for their convenience.

    > Will the same principle apply for owners of motorbikes? There are lots of foreign labourers, Indonesians included, who travel on motorbikes.

    > If I drive an old car which has a big capacity (for example the old Volvo 240, Mercedes Benz) and can’t afford to buy a new car, do I still pay the full amount?

    > What if my car is in the workshop and I have to borrow a relative’s car: do I have to pay more for petrol because the subsidy is only valid for one car according to one’s MyKad?

    > How about a foreigner who is visiting and driving a Malaysian friend’s car? Is he expected to carry the friend’s MyKad with him when he goes to fill up? Furthermore, there are Malaysian residents holding red ICs. Where do they fit in?

    > Why don’t they classify cars not according to capacity but type, luxury car, for example?

    fr:thestar.com.my/news/story.asp?file=/2010/1/17/focus/5489864&sec=focus

  9. Still in the dark over system
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    The Government’s plan to impose a two-tier pricing mechanism for petrol by May 1 has given rise to many questions but answers are hard to come by. Just how will the mechanics be worked out?

    THE Government wants to cut down on subsidies it pays on petrol by implementing a two-tier pricing system by May 1. Domestic Trade and Co-operatives and Consumerism Minister Datuk Seri Ismail Sabri Yaakob says the principle has been agreed upon but details are still being worked out. He has asked the public to give him their views via his Facebook.

    The move to reduce subsidies, including for sugar and other consumer products, is a very sensitive and difficult process, he admits.

    > People want to be informed early about the new fuel pricing mechanism so that they can be prepared.

    I agree but we have not fully settled on the exact mechanism. It’s still under discussion, that’s why we are still unable to announce details at this moment.

    What I was able to announce is the principle of the subsidy. Wherever you go in the world, subsidies are targeted at needy groups. In the case of petrol for our country, the poor or the middle income group.

    But now everyone is getting the petrol subsidy, including foreigners, which means the Government is subsidising citizens, non-citizens and the well-to-do. This is wrong. The principle of the new mechanism is that the subsidies will be given to only the targeted group.

    > Since the Government is still discussing the mechanism, maybe it won’t be implemented in May?

    That May 1 date is still on target but it will only be for the peninsula. For Sabah and Sarawak, the implementation will be later. The people there use four-wheel drive vehicles to get around and most are about 3,000cc. Even the poor are forced to use that because of the terrain. We will eventually have a mechanism for them.

    > How can people give their feedback constructively if they are not given some details of the proposal?

    But they are already doing that now. Even though no one is certain about what is going to happen on May 1, the debate and discussion have already started. Even the principle of the subsidy is being questioned. Even the rich are thinking they should be entitled to the subsidy.

    We are listening to the opinions and suggestions.

    Is the Government looking at engine capacity or the make of the car to determine who gets the subsidy? What engine capacity are you looking at?

    With cars, the best is to look at engine capacity. It’s wrong to go by the brand because that would be perceived as discriminating against a make. You can’t say whoever owns a BMW is not entitled to subsidised petrol; BMW would be mad at us. That’s why engine capacity is the best consideration. As for the engine capacity, we will announce later.

    > How about expensive cars like the Mini Cooper, which has a small engine but cost over RM200,000?

    There are also some kampung folk who use very old Mercedes Benz, which is very cheap – costing about RM10,000 – but the engine capacity is big. Whatever we do, we can’t cover 100%. There are bound to be some who won’t be covered. This is true of whatever policy we make; it can’t be 100% perfect. There will definitely be some who are not satisfied or who terlepas (escape).

    > Will there be two different pumps at petrol stations?

    We are still working out the mechanics but definitely not two pumps. We are looking at pumps having two prices or perhaps just having the market price on it but those entitled to the subsidised price get to pay less and get receipts for it.

    > Who decides on the engine capacity at the petrol station?

    We are considering putting a chip into our MyKad to register the car that’s entitled to the subsidised petrol. Each person is eligible for subsidised petrol for only one car. It’s not fair if you have 10 (small engine capacity) cars and you get subsidies for all 10. If the car is registered to different people, for example the wife, son or daughter, then each is eligible to the subsidy; one person per car. Children have to be 18 or above because, to own a car, you must be at least 18.

    > So we won’t be handing our MyKad to some foreign petrol attendant to check?

    I don’t think that will be the case because these days we are IT savvy. It’ll probably be swiping, like you do with the credit card. It will be a convenient system.

    > People who own big cars grumble that they already pay high duties for the imported cars. They are also paying high road taxes, so why shouldn’t they enjoy subsidised petrol because they are taxpayers too?

    The principle of the subsidy is that those entitled are the poor and middle income group. But we are listening to all views and there have been so many because everybody has been talking based on presumption.

    > But people argue that it’s better to disclose some details of what the Government is proposing so that they can give their views rather than speculate.

    I can’t give details because we are still discussing (them). In due time, the Government will announce the engine capacity and whether there is a cap on how many litres per person per month. If there is no cap per car, people will abuse it. They will use their Mykad to buy as much petrol as possible, transfer it into a drum and then sell it to those who don’t qualify for subsidies. So the question of how many litres will be announced later.

    > How about those who travel outstation for work or those in big cities who travel long distances daily because they can’t afford to buy or rent homes near their offices?

    We are looking at all angles. Someone who lives in a small town and goes to work nearby will benefit. We haven’t fixed a cap yet but if there is no limit, it will definitely be abused. Those near the Thai border will sell it over the border and, in other places, people will sell it to those who are not entitled. So there should definitely be a cap.

    > Is the Government also looking at reducing the subsidy on diesel?

    Not right now. The real market price should be RM2.09 per litre for diesel but fishermen pay only RM1.20, public transport such as school buses, public buses, lorries and prime movers pay RM1.43, normal cars RM1.70 and airport taxis RM1.58. The multiplier effect of diesel is different from petrol because petrol is not used for public transport and to transport goods. If we increase the price of diesel, bus fares will go up and the price of goods will increase immediately because transportation costs would increase. School bus operators, too, would want to hike up fares. There are a lot more considerations with regard to diesel than petrol.

    > What products is Malaysia still subsidising? Are we moving towards a no-subsidy regime?

    Sugar, cooking oil, flour, ST15 rice, petrol, diesel, LPG gas, and NGV gas for taxis. The fuel subsidies make up the highest amount. It was RM5.6bil last year (in 2008 when world oil price was higher, the subsidy was RM18.8bil).

    We are not moving towards a no-subsidy regime yet. I don’t foresee us doing away with the subsidy for basic items like rice and petrol. What we are trying to do now is to focus on the target group. There has been too much leakage because people who are not eligible are getting subsidies.

    > It has been reported that Malaysia by 2011 will be a net importer of oil, so shouldn’t we stop giving subsidy for oil?

    The people are not ready. When I raised the price of sugar by just 20 sen, people got angry. We must educate our people. The problem with us is that when we get something, there is no way the Government can take it back. Sugar was never a subsidised product. The Government only started subsidising sugar in 2009. Before that, because the world sugar prices were low – at US$14.50 per kg – we had no subsidy at all. But last year, the price shot up. The Government wanted to cushion the effect and started subsidising sugar. Taking it back now is very difficult because people think it is their right.

    > Isn’t there ample justification to withdraw the subsidy on sugar because less consumption is better?

    Many people, including consumer and health groups, feel there is no reason for the Government to subsidise sugar because it is bad for health. It can be likened to subsidising cigarettes. The sugar subsidy only makes people use more sugar every day and this will increase the number of chronic illnesses in the country. This is what people should understand. We have to educate people and make them aware. If we do not educate them, it would be difficult because we have been enjoying subsidies for too long. Last year, the subsidy for sugar was RM720mil. This year, despite the 20 sen increase, the Government will have to fork out an even higher subsidy of about RM1.008bil.

    > Biscuit and soft drinks manufacturers buy sugar at subsidised prices too. So can we have a two-tier system where industries pay the real market price?

    We should actually do this. The problem is if we do, there will be a shortage of sugar because people will start hoarding sugar. Retailers, too, will manipulate the supply and sell to industries as they pay higher prices. This will cause problems for consumers. As far as retailers are concerned, why should they sell to consumers for RM1.65 when they can sell at higher prices to factories?

    For example, if the real market price is RM2.45 and the factory offers retailers RM2.20, the factory saves cost and the retailer makes more money than selling it for RM1.65 to consumers. That’s our worry about putting two prices for sugar in place. This is what happened with subsidised diesel being sold on the black market.

    > What is the hardest subsidy for the Government to withdraw?

    Everything! The Government will spend RM104mil this year to subsidise flour. Last year, it was RM89mil. If we cut this, the Indians and roti canai lovers will make noise. So we are maintaining the price at RM1.35 because it is a staple food for Indians. Rice, too, is staple food for the Malays, Chinese and also Indians. It is also very hard to raise diesel price because the price of other goods will go up. As for petrol, we just have to raise the price by 5 sen and people will get angry.

    With sugar, too, people made noise when we hiked the price up by 20 sen even though sugar consumption is known to cause harm. However, they are not really worried about sugar consumption at home because they consume only 1kg or 2kg a month and a 20 sen hike per kg is not a burden at all. What they are worried about is the multiplier effect – the effect it would have on food prices outside.

    > Has the objection against the sugar hike been very serious?

    Not so much because consumer associations have come out in support of the Government. We argue that for health reasons people should consume less, so why buy sweet things outside? But people still fear a hike in prices of food products. That’s why we will continue our campaign of reducing sugar in food and drinks.

    fr:thestar.com.my/news/story.asp?file=/2010/1/17/focus/5485032&sec=focus

  10. Malaysia’s subsidy dilemma
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    While it appears that the government has decided on a piecemeal removal of subsidies, some Cabinet members, senior government officials and economists believe that a complete withdrawal would benefit the country more.

    The Malaysian Insider understands from government officials that a total removal of subsidies for fuel, gas, flour and sugar could save the government up to RM50 billion a year.

    Some Cabinet members and government officials are understood to be mulling the idea of biting the bullet, instead of doing it little by little.

    They are arguing that the huge sum of money saved could be used to provide targeted help for the lower income group.

    The savings from removing subsidies could also be used to free up money for various government infrastructure projects that would directly stimulate the economy.

    The idea of a piecemeal removal has already proven to be problematic.

    While the subsidy on gas is likely to be reduced soon, the plan for a two-tier pricing mechanism for petrol has attracted strong public criticism.

    From May 1, Malaysians and non-citizens will pay different petrol prices as foreigners are not eligible for fuel subsidies, Domestic Trade, Cooperatives and Consumerism Minister Datuk Seri Ismail Sabri Yaakob announced recently.

    To further complicate matters, not all Malaysians will get to enjoy subsidised petrol either. An announcement on the detailed mechanics of the system will be made on May 1, the day it goes into effect.

    The minister said the petrol subsidy for those who qualify will be based on the engine capacity of their vehicles. The focus will be on those with lower income, who also usually use cars with smaller engines, he said.

    The government currently subsidises 30 sen of the cost RON 95 petrol. The original price of RON 95 is RM2.10. The price of subsidised RON 95 is RM1.80.

    In an interview with The Star published yesterday, Ismail said the government is likely to put a cap on the amount of subsidised petrol a car owner can buy monthly, when the new petrol pricing mechanism starts on May 1.

    These proposals have attracted widespread criticisms because they are cumbersome and still subject to abuse or could end up penalising those in the lower income group.

    Government officials in favour of removing subsidies altogether contend that a total withdrawal would remove the need for such complicated measures.

    And they also argue that political fallout would be minimal as long funds from the savings are targeted at the right people and actually reach them.

    The argument is that with up to RM50 billion freed up, direct cash aid could be awarded to those in need of such help.

    Such a move appears to be a better option but Cabinet members remain unsure as to the best way to handle the subsidy problem.

    fr:themalaysianinsider.com/index.php/malaysia/49919-bns-subsidy-dilemma

  11. Petrol pricing: More feedback needed, says Gerakan man
    ——————————————————–

    The new petrol pricing mechanism needs to be studied comprehensively and thoroughly before being implemented to prevent profiteering, said Gerakan vice-president Datuk Mah Siew Keong.

    “Loopholes allowing abuse of the system would be a waste of government resources,” he said in a statement.

    The Government should get more feedback from consumer groups, non-governmental organisations and civil society before implementing the new mechanism, he said.

    Gerakan has received many views and much feedback from the people since the proposal was announced and would forward this to the ministry, he added.

    The Government recently announced that it would fix a two-tier pricing system for petrol, depending on engine capacity, while foreigners would have to pay the market price.

    Currently, the Government is subsidising petrol at 30 sen per litre for all. The market price for RON 95 is RM2.10 per litre but because of the subsidy, the pump price is only RM1.80.

    The mechanism would only be announced when the scheme goes into effect on May 1.

    fr:thestar.com.my/news/story.asp?file=/2010/1/18/nation/20100118140843&sec=nation

  12. Malaysians not ready to give up subsidies, says Ismail
    ——————————————————–

    Domestic Trade, Co-operatives and Consumerism minister Datuk Seri Ismail Sabri Yaakob believes that Malaysians are generally not ready for a total scrapping of fuel subsidies, and that the government would only do so if there was a consensus from the public.

    His response came despite internal government discussion that removing all subsidies in the country could save Malaysia some RM50 billion a year. The government currently subsidises fuel, gas, flour and sugar.

    “If all Malaysians think like you, if we phase out subsidies entirely, there would not be a problem in terms of fuel caps, Mykad… no problems on two-tier fuel pricing,” the minister said when responding to a question from a reporter today.

    “In other countries there is no fuel subsidy, there is no question of two prices… the price of fuel depends on the market value. [Currently] we give [a] 30 sen subsidy for every litre of petrol. If we want to give subsidy, it should be to those who are in need of it,” Ismail added.

    He stated that while the removal of subsidies would be the easiest solution, the question remains as to whether Malaysians would be able to accept “that fact.”

    “At this point of time… Malaysians, when they are given subsidies, they think that it is their right, something which cannot be taken away from them. When we first introduced RON95 the price was RM1.75. On Sept 1, it went up to RM1.80… just a five sen increase, but the whole of Malaysia was in havoc.”

    Ismail stated that RM3.5 billion could be saved if petrol subsidies were removed, but questioned whether Malaysians were prepared for that scenario. The money saved, according to him could be used for repairing schools, scholarships to students as well as providing free tuition and healthcare for the poor.

    “Right now, the concept of subsidy needs to be corrected. This is the government’s initial step. People need to understand that subsidies are only meant to be given to those who are in need.

    “This means that rich people do not get subsidies,” he explained.

    Ismail also maintained that the government will only consider a total subsidy scrapping only if there was positive feedback from the public.

    He refused to provide more details on the developments of the new two-tier fuel subsidy system, only stating that an announcement will be made sometime in March.

    From May 1, Malaysians and non-citizens will have to pay different petrol prices as foreigners are not eligible for subsidised petrol.

    It is understood that effective from that date, the purchase of petrol using MyKad will be introduced whereby only citizens will enjoy the subsidy.

    To further complicate matters, not all Malaysians will get to enjoy subsidised petrol either. An announcement on the detailed mechanics of the system will be made on the same day it goes into effect.

    The petrol subsidy for those who qualify will be based on the engine capacity of their vehicles. The focus will be on those with lower income who also usually use cars with smaller engines, according to Ismail.

    The government currently subsidises 30 sen of the RON 95 fuel cost. The original price of RON 95 is RM2.10. The subsidised price RON 95 is RM1.80.

    fr:themalaysianinsider.com/index.php/malaysia/49973-malaysians-not-ready-to-give-up-subsidies-says-ismail-

  13. Thumbs up for fuel cap
    —————————

    Consumer associations welcome the Government’s plan to cap the amount of subsidised petrol a car owner can buy monthly.

    However, they called on the authorities to ensure that the new fuel pricing mechanism would not complicate or confuse consumers.

    Fomca secretary-general Muhammad Shaani Abdullah said it was important for the fuel price cap to be linked to the car driver’s MyKad to ensure subsidised petrol reach the right consumers.

    “Information on the MyKad computer chip should be similar to that already retained by the chip in our credit cards on transactions.”

    However, Muhammad Shaani said questions arose on how the new petrol pricing mechanism would be implemented as there was currently no proper central database on Malaysian drivers in terms of the number of cars they owned or their vehicles’ engine capacity.

    “This lack of information might make enforcement difficult,” he said.

    Muhammad Shaani suggested that every local car owner receive the same amount of subsidised petrol, regardless of the number of vehicles he had and that he would have to pay for unsubsidised fuel when he exceeded the cap.

    Asian Strategy and Leadership Institute Centre for Public Policy Studies chairman Tan Sri Ramon Navaratnam said it was time for the rich and foreign motorists from Thailand and Singapore to pay for unsubsidised petrol.

    “Loopholes and cheating may occur but this must be countered by stronger enforcement.”

    Malaysian Employers Federation executive secretary Shamsuddin Bardan said the complexity of the fuel subsidy system with the introduction of a MyKad at the fuel pumps might not go down well with the business community.

    “My worry is that the Government’s cost of implementing the two-tier system may be higher than the fuel subsidy saved in the long term.

    “The petrol stations may have to buy expensive tracking equipment for the MyKad,” he said.

    It was reported on Sunday that Domestic Trade, Co-operatives and Consumerism Minister Datuk Seri Ismail Sabri Yaakob said that a cap was likely to be imposed on the amount of subsidised petrol a car owner could buy once the new two-tier petrol pricing mechanism starts on May 1.

    fr:thestar.com.my/news/story.asp?file=/2010/1/18/nation/5492828&sec=nation

  14. Make sure petrol scheme is practical
    ———————————-

    IT IS good to know that the Government is to implement a scheme using the MyKad to control the sale of petrol from May. Before it introduces that in the market, can the Government consider a few points?

    Is there any limit on a MyKad holder pumping petrol in any one day or within a certain period?

    This is because a MyKad holder may have several vehicles registered in his name, for example, a Proton Wira (1300cc), a Honda Accord (2000cc), and a Toyota Camry (2400cc) or Mercedes Benz (3200cc).

    In the morning, he pumps petrol into his Mercedes to go to work and in the evening uses his Proton Wira to go out, pumping petrol at the same petrol kiosk in his housing area.

    Meanwhile, his wife may use the Honda Accord for shopping and needs to fill up, too.

    So, if there is no limitation of use of a MyKad for pumping petrol, then any foreigner can borrow a MyKad to pump petrol without anyone noticing, unless an enforcement officer is stationed to check on the details of the MyKad holder.

    I do not think the petrol kiosk attendants (most of whom are foreigners, too) are authorised to check anyone’s identity card.

    I wonder how the Government is to segregate the pumps in a petrol station in accordance with the different capacities of the cars if there are only two or three kiosks available in one station, especially in rural areas.

    I hope the Government will conduct a trial run to make sure it is practical and accepted by the public before implementing the proposal nationwide. Otherwise, money will be wasted and the public inconvenienced.

    CONCERNED RAKYAT,

    Kuala Lumpur.

    fr:thestar.com.my/news/story.asp?file=/2010/1/18/focus/5492226&sec=focus

  15. Used car dealers cautious on outlook for 2010
    ———-

    With improving economic conditions, 2010 seems poised for better times. However, many local used car dealers are maintaining a cautious outlook for the year.

    Kuala Lumpur-based used car dealer Dave Foong said he was neither optimistic nor pessimistic about the used car horizon in Malaysia, claiming that it was “still too early” to determine what was in store for the market for 2010.

    “The market still seems uncertain. People are very careful about how they want to spend their money,” he told StarBiz.

    “If there is a significant economic turnaround, people will start buying, but for now it’s hard to determine if (sales for) 2010 will be better than 2009,” said the manager of Zaibi Motor Sdn Bhd in Bangsar.

    Foong also said the imposition of a RM10,000 charge on the price of open approved permits (APs) would impact sales.

    During the tabling of Budget 2010 last October, the Government proposed that open APs no longer be sold for a measly few ringgit, instead a RM10,000 fee was levied for such a document.

    When polled by StarBiz at the end of 2008, like many local used car dealers, Foong forecast a bleak outlook for 2009. Thankfully, conditions weren’t as tough as initially expected, he said.

    “Fortunately, 2009 wasn’t as bad. Can still survive-lah.”

    Foong has been in the used car business for over 15 years. The company sells fully imported cars. Overall, he said Japanese brands were the most popular in 2009.

    “Japanese brands like Toyota had the best resale value. Models like the Alphard and Estima were still moving. People were more selective with the European brands.

    “Japanese makes are the bread and butter of the local used car industry,” he said, adding that the used car trade did see a “pick up” towards the end of 2009.

    A Klang Valley-based used car dealer, who requested anonymity, said he was hopeful that 2010 would be “a better year” for the industry.

    “Markets everywhere are turning around and hopefully conditions will be better in 2010,” he said.

    The dealer said sales of local cars (versus foreign vehicles) performed better in 2009 and the trend would continue for 2010. He said rising inflation would have an impact going forward.

    “Oil prices are not favourable, having breached the US$80-mark recently. This will spur inflation and will have an impact on business,” he said.

    Butterworth-based Keat Hoe Used Car Enterprise is also unsure about what to expect for 2010. Sales manager David Ang said: “The market is still unstable and the credit facilities are still not so good; 2010 will be a slow year.”

    He said fuel efficient, smaller engine capacity cars would sell well.

    “These cars are easier to sell as they are also cheaper.”

    Ang said that with the Chinese New Year festival next month, sales in the first few months on the year was expected to be slow.

    “During these times, people will spend money on festive gifts or even go on holiday. After that, would they have money to buy cars?”

    He also said the recently announced petrol subsidy scheme, which requires owners of cars with bigger engine capacities to pay a higher price for petrol, would have an impact on the used car trade.

    The Government earlier this month said it was planning a fuel pricing mechanism to ensure that only targeted groups, particularly those with lower income, would receive the fuel subsidy.

    “It won’t just affect the rich. There are many businessmen who drive big cars but not all of them are wealthy. The not-so-rich ones will also be affected,” Ang said.

    Kuala Lumpur-based Kim Sang Used Car Co is also maintaining a very cautious outlook. Salesman Sunny said he was expecting a “tough 2010.”

    “The economy is not good and many people are still holding back to wait and see.”

    He also cited a recent news report on a Penang-based used car dealer offering a “buy one, get one free’’ package of a pre-owned Proton Iswara or Perodua Kancil with every purchase of a luxury car worth over RM100,000 in conjunction with the Chinese New Year.

    “The fact that dealers are resorting to such measures is evidence that times are still not good,” said Sunny.

    Sales manager Terence Chin of Klang Valley-based Sadra Motor Sdn Bhd, meanwhile, said business was “okay” in 2009 and should be “about the same” this year.

    “We’re not cautious. But we will need to work harder,” he said.

    fr:biz.thestar.com.my/news/story.asp?file=/2010/1/18/business/5422456&sec=business

  16. Forget subsidies, just give me cash
    ———–

    In spite of opposition that saw the streets of Kuala Lumpur filled with pro-fuel subsidy groups during the Abdullah administration, efforts to liberalise the fuel subsidy regime has gone a long way.

    Out of a number of its arguments, one that criticises the untargeted and blanket nature of the policy has gained tremendous traction. The fact that it benefits those who do not need or deserve the subsidy is clearly one of the main motivators — the bigger drivers are probably cost and waste — behind the reformation of the policy.

    The Najib administration is addressing this particular criticism. That has resulted in multiple novel moves and proposals from the federal government. Among the proposals reported in the mainstream media are different prices for different groups, a cap on subsidised fuel consumption and access to subsidy based on engine size. While the moves and proposals may reduce the size of fuel subsidy either in value or in quantity, the proposals may appear too convoluted.

    I appreciate the government’s effort at making the policy more targeted hence, less wasteful in terms of opportunity cost. Yet, these novel ways are really unnecessary given its simpler alternatives. In fact, the more convoluted the methods are, the more complex the implementation will be. That is a recipe for a disaster, policy wise.

    Just observe the recent attempt to limit the sale of subsidised fuel to foreigners at the border. So complicated was it that everybody was confused and in the end, it did not work. Consumers found ways around the restriction.

    There is a better and much simpler way to do to this.

    Before we proceed to that better and simpler policy, it is crucial for us to recall the purpose of the fuel subsidy. Its goal is ultimately to reduce the cost of living of the less well-to-do Malaysians. On top of that, fuel subsidy is not the only way to achieve that goal.

    With that in mind, the better alternative to the fuel subsidy is a simple cash transfer from the government to those who deserve it.

    Why cash transfer?

    The first reason is that it paves the way for total elimination of fuel subsidy to free up the market. Since free prices signal scarcity, individuals and entities will make decisions that are more reflective of the reality of the energy market. On top of that, it creates real competition among pump owners. The same system of free prices already exists in the United States and Australia. Its effectiveness is proven.

    Not only that, elimination of subsidy at the pump reduces consumption, all else being constant. That means lower carbon emissions. In times when carbon emissions are a worldwide concern and in light of the Najib administration’s promise to announce a carbon cut roadmap in the near future, this is an opportunity to integrate transportation and energy policies together environmental policy. Such integration is important given that, according to the International Energy Agency in 2007, the transportation sector was the source of 30 per cent of Malaysia’s carbon dioxide emissions in 2005.

    Thirdly, cash can be used for a variety of things and not just fuel. Maybe a beneficiary of such a cash transfer appreciates books or food more than fuel. This has the potential of increasing the beneficiary’s welfare higher than what a fuel subsidy policy can bring. If the beneficiary does appreciate fuel more than anything else, then he or she can simply buy the same amount of fuel he or she would have otherwise bought under the fuel subsidy policy. In other words, there are more choices. The economics behind cash transfer is clearly more welfare enhancing than a simple fuel subsidy.

    The next question is, naturally, how to do it.

    If the sale of subsidised fuel is to be limited, then the government will have a good idea about the maximum amount of money it needs to spend on fuel subsidy. Furthermore, the lower the cap, the higher the likelihood a beneficiary of the subsidy will exhaust his or her quota. From there on, certain statistical manipulations can give us the size of money transfer per capita required to make the cash transfer method the equivalent of the fuel subsidy policy in terms of value.

    The cash transfer itself can be delivered to the deserving via the existing tax system. Here is another beauty of cash transfer. It pays only to those who have filed their taxes. Thus, this is yet another incentive for those who have yet to file their tax to finally do so.

    For those who just want to fill up their vehicles, here is another reason to support a simple cash transfer instead of an explicit targeted fuel subsidy policy: no weird rule at the pump.

    So, what about it that is not to like?

    fr:themalaysianinsider.com/index.php/opinion/hafiznoorshams/50045-forget-subsidies-just-give-me-cash

  17. Follow the US style to determine petrol prices
    ————

    IT is good that the public is having discussions on the GST, subsidised goods, missing foreigners, petrol pricing and the use of MyKad to assist in differentiating between the subsidised and unsubsidised petrol user.

    I am a bit pessimistic with regard to most of the current inflation-related issues. I am worried about the flip-flop repercussions of any decision. We have seen government decisions made and later there is a change of mind due to public empathy.

    I would like to offer a proposal on petrol pricing. I am sure many Malaysians understand the disadvantages of a subsidy mentality in the economic sense. As we are going into a high income economy, subsidising essentials must be kept to a minimum and the saved resources should be allocated to new economic spending areas, such as in R&D, biomedicine, branding, etc.

    Let us take, for example, how petrol prices are charged at the pump in the United States. In states that are producing oil, such as Texas, petrol prices are the cheapest while prices in the states that are furthest from the refineries are the highest. I am not sure how the MyKad can assist in this exercise.

    I feel that states such as Kuala Lumpur, Selangor, Penang and Johor should not have any subsidies at all. The standard of living in these states is higher compared to that of Kelantan or Perlis.

    Maybe users in those states where the per capita income is lower should pay RM1.80 per litre while those in states with higher capital income should pay RM2.10 per litre. This would better improve the distribution of resources.

    Even with the current pricing and the use of the MyKad, it won’t be fair and it won’t stop the pilferage. Let’s give this a try. There won’t be any incentive for Singaporeans to drive all the way to Malacca just to get cheaper petrol and driving back to Singapore.

    As for those in Kelantan and Perlis, issues such as smuggling will still happen regardless of monthly rationing or with the MyKad.

    RAS,
    Kuala Lumpur.

    fr:thestar.com.my/news/story.asp?file=/2010/1/20/focus/5495217&sec=focus

  18. One rate for whole economy is better
    ———–

    SOMETIMES I wonder how the Malaysian market economy is being managed. I am referring to your news report “Fuel Cap” (Sunday Star, Jan 17). My issue is not on how the fuel subsidy should be managed. My issue is should we have this kind of multi-sector and multi-categorisation subsidy system in the first place.

    We know for a fact the Malaysian economy has been distorted and dissected into numerous groups and sectors already. Each distortion and categorisation has created more controversy, inefficiency and avenues for corruption. How we could have managed a market economy with total disregard for basic market principles is simply beyond my comprehension.

    Malaysia is one principal customs area. If there is any subsidy or taxation, the rate should be uniformly applied throughout the whole economy.

    To dissect, to discriminate, and to categorise into different groups or sectors for subsidy entitlement or taxation burden could only result in more hardship, unfairness, inefficiency, arbitrage and corruption especially by those administering such schemes.

    We have fleet cards, subsidies for taxies, buses and boats for fishermen. As if this is not complicated enough, now we want to dissect passenger cars into different categories. We spent hundreds of millions in subsidy on fishermen. Did the amount of fish landed really increase?

    How much of the petrol and diesel were really used by fishermen to catch fish? Did the subsidised fuel really translate into lower prices of fish in the market?

    How much of the fish we consume were supplied by foreign fishermen who enjoyed no subsides from us?

    When a subsidy is given, we can’t guarantee complete fairness. Sure, the rich and the wealthy may have gained more from the subsidy, but they have also contributed more in the form of higher taxes?

    When they buy a vehicle, the extra taxes (in the form of sales tax, excise duty, and annual road tax) they pay is probably many times more than the extra fuel subsidy they enjoy. What fairness can we extract from them further? Don’t forget they have also paid higher income taxes.

    In managing a market economy, we must allow capitalism and market mechanism to work.

    We may tinker a little here and there to make it less painful for some but the objective is not really to achieve complete parity or equality.

    Didn’t the communists try to do that but we know the result was disastrous for everybody?

    They tried to make equality their priority, but the policies made almost everybody equally poor and today communism is history.

    A market economy, albeit with limited government intervention, has made people unevenly rich, which is better than making everybody poor.

    To minimise distortions and to enhance efficiency, the Government must first decide whether to subsidise or not to subsidise the fuel.

    If the decision is to subsidise, it is better to have just one rate for the whole economy. Multiple subsidised rates for different sectors or different groups of citizens only cause high administrative cost, profiteering, inefficiency, corruption and arbitrage.

    T.K. CHUA,
    Kuala Lumpur

    fr:thestar.com.my/news/story.asp?file=/2010/1/19/focus/5495295&sec=focus

  19. Some things are simply impossible
    ——————-

    Two prices for petrol won’t work, not even in Malaysia

    IT IS May 1. Malaysia is in the midst of a major experiment. It is, in the true spirit of “Malaysia Boleh”, embarking on something that had never before been done anywhere, anytime successfully.

    If we succeed, it would be yet another world first. It would dwarf the Petronas twin towers in terms of impact. Climbing Everest – which has been done by over 1,500 people – will be nothing in comparison.

    Sailing around the world has been done many times before and is no longer necessary since we have powered boats, but that will be a tiny drop in the oceans sailed compared with what we are attempting to do now.

    On that day, I take my 20-year-old BMW 525i — those of you who know cars know that it has a 2.5 litre engine but the car value is less than RM25,000, way below the price of any new car — to the petrol station.

    I go to the pump where petrol costs RM1.80 a litre, but no, they look at my car and say that it definitely does not have an engine capacity of 1.6 litres or less. That means I can’t fill up there, they say. Go that way and pay RM2.10 a litre.

    Why? I asked. I am not rich, but I am not poor either. Why ask me to pay the price the rich pay for their petrol? Just because I drive a high engine capacity car (its terribly old, by the way), does that mean that I am rich and therefore must pay more for my petrol?

    The petrol pump attendant looks askance at me. He’s pleading with his eyes. Behind me, a Haji waits with his old Mercedes Benz in tense negotiation with another pump attendant. There are three or four negotiations going on.

    In petrol kiosks across the nation these scenes are repeated – it takes 30 minutes to fill up your tank even if you drive a car with an engine capacity of 1600cc or less. But then, this is Malaysia, the land where anything can, and does, happen.

    By this time, the petrol attendant has a twinkle in his eye. “Sir,” he begins, hopefully, “you fill up your tank at the old price, but you just pay RM5 to me, OK? You win, I win.”

    I do some quick calculations. A full tank will mean at least 60 litres. At 30 sen a litre, I save RM18. Give him RM5 and I am still RM13 up. Yes, that’s a good deal, far better than having to pay RM18. I signal to him.

    In a thrice the price changes on the display. I fill up, and surreptitiously hand over the five bucks. I saunter over to my car, start it and nonchalantly drive away. Another day in boleh-land.

    Poor Pak Haji has more scruples. He continues to protest but for him, poor as he was, it will be higher prices for petrol. But unlike Pak Haji, most people are quite happy to avoid paying their dues to the Government.

    Back home, I turn on the TV to watch the Domestic Trade and Consumer Affairs Minister aver that this latest move to have one price for the rich and one for the poor will save the government hundreds of millions of ringgit a year. Really?

    You might know that we already have had two prices for diesel. Fishermen pay lower prices. Can you guess what happened? Their consumption of diesel increased considerably – I think it was two- or three-fold over two to three years. But here’s the strange thing: the amount of fish caught did not – it declined!

    How is that? I don’t think they went on joy rides on subsidised diesel. There is just one explanation – the fishermen, at least some of them, were siphoning off the diesel to sell it to others at higher prices.

    It made them richer, but I am sure that was not the way the Government – or the public – wanted it.

    When you subsidise everyone, it is easy. One price for everyone. The only problem is smuggling across the borders. And since oil is a bulky item that requires considerable storage capacity, it is not easy, provided Customs officials are straight and vigilant.

    Oh, Malaysia, my heart bleeds for this country of mine (and yours too). The solution is so simple and yet we don’t see it – which has to mean that we don’t want to see it. We want to touch our noses by moving our hands behind our heads first.

    There is just one way to solve the subsidy problem – much like the solution to the AP (approved permit) problem. Simply abolish it – and that goes for the associated taxes too. (If we have a tax that is greater than the subsidy, we are NOT subsidising the product.)

    That way, everybody pays the true price of goods. If prices go up, we all pay for it. If prices go down, we all benefit from it. If we use more of it, we will pay more, and vice versa. The rich will use more oil and they will pay for it. The poor use less and pay less. Simple.

    We must have just one price for one grade of product. If the world price moves too high, and considering that we are net exporters of energy, we may choose to subsidise the oil price. But still, one price is what we must have. Anything else spells disaster.

    If the Government wants to relieve the burden on the poor, then simply establish an effective, tamper-proof, independent and objective system to determine who are the poor and give the money directly to them.

    Some things are impossible, notwithstanding our penchant to try for the unachievable. When there are two prices for the same product at the same place, then someone other than the Government will benefit from arbitraging between the two. You can bet your life on that.

    Managing editor P. Gunasegaram hopes that no enforcement officer comes knocking at his door. He was merely building a scenario and has no intention of paying any money under the counter. Promise!

    fr:thestar.com.my/columnists/story.asp?file=/2010/1/22/columnists/questiontime/5520507&sec=questiontime

  20. New subsidy system keeps public guessing
    ———–

    EVER since the issue on petrol subsidy surfaced, many have voiced their opinion one way or another. Indeed, some have even suggested alternative methods in ensuring only those deserving continue to receive the subsidy.

    There has been a public outcry as some feel that the proposed use of MyKad as a tool to regulate the subsidy may not be the optimal solution.

    We agree that subsidies should only be enjoyed by certain deserving communities but we must also realise that with such a diversified and heterogeneous society, it may create more problems and confusion.

    There are many issues that need to be addressed and I really wonder if all have been thought of by the authorities. Some of the unanswered questions are:

    > How will a person qualify for the subsidy if he has many cars registered under his name with varying engine capacities?

    > How does the control mechanism work?

    > What about vehicles registered under company names that do not have MyKad? Are they not entitled to the subsidy?

    > Are there going to be new mechanisms to plug loopholes?

    The list of questions seems to be growing daily and many consumers are eagerly waiting for the Government to provide details.

    We know very well that there are millions of foreigners in Malaysia who also enjoy the current subsidies, especially those with motorcycles. How will their fuel consumption be regulated and controlled? Will they pay the full unsubsidised price?

    Many consumers use credit cards at the pump for various reasons like rebates or not wanting to queue at the counter. Now one wonders if the MyKad is the control point, do we also need to swipe it together with the credit card at the pump or line up to show proof of entitlement at the counter?

    Above all, have the authorities ensured a fool-proof system to safeguard the personal information stored in the MyKad as it can be breached if used far too often. Will the chip withstand the repeated swipes?

    And how shall one go about buying fuel if the MyKad is lost or stolen as a replacement can take up to a month?

    The authorities should look at all the pitfalls before making a decision. The public needs to be comfortable with the new system. We are not resisting change but we do not want policies that can be troublesome.

    NARINDER PAL SINGH.
    Shah Alam.

    fr:thestar.com.my/news/story.asp?file=/2010/1/26/focus/5520204&sec=focus

  21. Why the big hoo-ha over fuel subsidy?

    I would like to touch on the issue of fuel subsidy. The problem can easily be solved if some foresight is put in place at the planning stage. If we limit foreigners to 20 litres, they can go to five stations and get 100 litres. What control are we talking about?

    To simplify things, let the petrol station designate a special pump using different colour or design which dispenses fuel to foreigners at the higher unsubsidised price. Foreign cars can only use that pump or face severe penalties if caught using other pumps.

    I am also upset about the issue of fuel subsidy to the needy groups. There has been so much discussion on the mechanism, quantum, eligibility, the use of MyKad, coupons and all other associated issues such as how much petrol a driver can purchase.

    Why is the Government bending backwards to please them? If motorists cannot afford it, they should be using public transport or motorcycles or even bicycles.

    If they can afford a car, they should be able to afford the petrol, which is already subsidised. And if they can’t afford the petrol, give up the car. We have to be responsible citizens and make do with what we have or work harder, rather than putting pressure on the Government.

    ·work from 7am to 7pm, even on Saturdays and Sundays. It is no big deal; why cry and beg and plead?

    If the Government insists on giving aid or subsidy, the simpler way is to reduce road tax and offer other assistance to public transport operators, such as buses and taxis.

    STEVEN NG,

    Johor Baru.

    fr:thestar.com.my/news/story.asp?file=/2010/1/28/focus/5558564&sec=focus

  22. Use savings from subsidy cut to lighten the people’s burden

    MALAYSIANS have, over these past few weeks, braced themselves for what seems inevitable over the months ahead – costs are going to rise whether we like it or not.

    The main culprit for dearer goods will certainly be once again the price of commodities, thanks to all that cheap money that is sloshing around the financial systems the world over searching for higher returns rather than actual demand.

    Such rising costs are already evident in Malaysia when under the strain of high sugar prices, the Government scaled back on the amount of subsidies it pays to keep the price of this commodity down.

    That, together with the rising global commodity prices, have led to the price of bread going up. And next to see a price increase will be petrol as the Government tinkers with the fuel subsidy to lower its own bill.

    The general expectation is that the subsidy bill the Government has borne will over time be reduced and Malaysians will be increasingly exposed to higher prices.

    Higher prices will undeniably eat into disposable income, especially for the middle class who will be less eligible to benefit from any subsidies which will be earmarked for the poor.

    They will undoubtedly add to the increasing bills middle-class families have to endure. The cost of living in cities has gone up and higher costs will shrink the disposable incomes of such families already burdened by a myriad of other expenses to run a household.

    Therefore, what the Government does with the savings from slashing its subsidy burden will be important, at least for the middle-class population and indirectly for the economy.

    For one, there should be some communication on how the money used to lighten the load on taxpayers and the public would be utilised.

    The federal deficit would be an area that would benefit immediately from the reduction in Government expenses but the impact of households having less to spend would also be detrimental.

    One way the savings could be used is to improve public transport in major cities. For years, residents in the Klang Valley have been told of an extensive expansion of the rail system but nothing has materialised.

    Another way to put the freed-up money to good use is to generate more business activities in the economy.

    Business investment, which is the lifeblood of any economy, is down. Private companies are showing more reluctance to invest and maybe the money that would have gone towards subsidies in the past could be used to breathe life back into domestic investment.

    Investing in productive capacity through matching grants or monetary incentives for businesses might be an avenue worth looking at.

    Whatever the case, such savings should be put into use that ensures greater productivity and output by Malaysians.

    l Deputy news editor Jagdev Singh Sidhu wonders how much more is it going to cost to fill up a trolley at the supermarket by the end of the year

    fr:biz.thestar.com.my/news/story.asp?file=/2010/1/28/business/5561158&sec=business

  23. Hassles, congestion and extra costs to come with new fuel subsidy scheme

    PETALING JAYA: The Petrol Dealers Asso-ciation of Malaysia has expressed concern that the new fuel subsidy system which uses MyKad for petrol purchase may create hassles for consumers.

    The association is worried that the system could cause congestion apart from burdening petrol dealers with additional costs.

    Association president Datuk Hashim Othman said a bank had been appointed to manage the operation of the new fuel subsidy scheme and consumers might have to register their car registration number through the bank or petrol stations using MyKad.

    He anticipated that it would take a longer time to process transactions as biometrics would be used to verify the vehicle owner’s identity through thumbprint scanning and this could lead to possible congestion at the petrol stations.

    “Experts in the field may say it is applicable but people on the ground are worried that the thumbprint scan, which is similar to the practice in the airport, may delay transactions and create congestion at petrol stations,” he told The Star yesterday.

    A new petrol pricing mechanism is expected to start on May 1, which is aimed at ensuring that only targetted groups are allowed to buy subsidised fuel.

    To implement this, the Government plans to introduce the practice of using MyKad to purchase petrol.

    Hashim said the Government was still negotiating the quota of fuel subsidy that each car owner would be entitled to.

    “The idea to give fuel subsidy to deserving people is good but we are worried that the system may be complicated and cannot address arising problems.”

    He said a pilot project might be carried out in selected petrol stations in the Klang Valley and some outskirt areas at the end of next month or in April.

    Hashim said petrol dealers would then have to install the system to be connected to the bank and increase their manpower and this could lead to extra costs for them.

    He said petrol dealers might also have to bear additional costs when the Government floated the price of fuel.

    fr:thestar.com.my/news/story.asp?file=/2010/2/18/nation/5697567&sec=nation

  24. We are in the dark over new petrol pricing, says association

    IPOH: The proposed new fuel pricing mechanism may not take off on May 1 because most petrol dealers are still in the dark over details of the plan, said a source from the Perak Petrol Dealers Association.

    “We are still unsure on the type of car owners who will qualify for the subsidy,” he said.

    The source said that the latest information obtained by the association hinted that 2,000cc and above vehicles and company-owned cars would not be entitled to the subsidy.

    Under the new system, each motorist was only eligible to one subsidy, he said.

    “You can have a garage full of cars registered under your name but only one car will be entitled to it,” he said.

    Association chairman Ng Bee Keong said members, whose stations were considered as “high volume”, had been advised to get ready for the change.

    ”We foresee that more workers would be needed once the system is implemented,” he said, explaining that the workers were needed to assist in the operating of the MyKad reader.

    Deputy Domestic Trade, Co-operatives and Consumerism Minister Datuk Tan Lian Hoe, when met at the Perak Chinese Chambers of Commerce and Industry Chinese New Year open house on Monday, said her ministry was still gathering feedback on the matter from the people.

    fr:thestar.com.my/news/story.asp?file=/2010/2/18/nation/5697568&sec=nation

  25. Concerns over use of MyKad to buy petrol

    PETALING JAYA: Several consumers have offered suggestions and expressed concerns over the new fuel subsidy scheme using MyKad to purchase petrol.

    Multimedia University faculty of creative multimedia assistant lecturer Avijit Paul proposed that the Government allow MyKad to function like a reload facility to pay for fuel.

    “This can avoid hassle and congestion at petrol stations.

    “You load a value first and use it later. Car owners will normally know how much they spend for petrol. So they can reload it upfront,” he said in an e-mail to The Star yesterday.

    “This can save cost and won’t create hassle and congestion as you don’t need to go through many verification processes and extra devices,” he added.

    Another consumer David Yong questioned whether those having foreign spouses could use their MyKad to buy fuel for their husbands or wives.

    “Having read a recent article in your daily, I am concerned about the Government asking consumers to buy petrol using MyKad. What happens if the consumer is a foreigner without a MyKad, like my wife from Canada. Do I have to do the refuelling for her?”

    He hopes the Government will consider the scheme very carefully before implementing it.

    “It may backfire and cause more frustration. Why not just simply adjust the pricing of petrol based on market rates, just like most Western countries,” he said.

    fr:thestar.com.my/news/story.asp?file=/2010/2/19/nation/5701859&sec=nation

  26. A painless fuel scheme

    KUALA LUMPUR: The fuel subsidy mechanism to be announced next month will be one that will make everyone happy.

    Domestic Trade, Cooperatives and Consumerism Minister Datuk Seri Ismail Sabri Yaakob said the Government was now looking at views and proposals submitted by non-governmental organisations and the rakyat.

    “The Government today is one that listens to the people’s views. We will consider whatever views we receive.

    “What’s certain is that the announcement will make everyone happy,” he said after launching a consumerism competition jointly organised by Fomca and the ministry here yesterday.

    The competition, which will run until June 18, is a run-up to the country’s month-long Consumer Rights Day celebrations in July.

    “Whatever has been said is mere speculation,” he said in response to the Petrol Dealers Association of Malaysia’s concern that the new subsidy scheme, which will entail the use of MyKad for petrol purchases, could be troublesome for consumers and dealers.

    “They are worrying over something that has yet to take place. Wait for the announcement,” he added.

    Ismail Sabri said the Government has not discussed the mechanism with the association as it was still not certain about the details.

    The new fuel mechanism scheme, expected to begin in May, will ensure that only targeted groups could buy subsidised fuel.

    Asked whether fuel prices would be increased, he said: “We should bear in mind that we don’t determine the price of petrol, it depends on the global price.”

    Earlier in his speech, Ismail Sabri said amendments would be made to the Consumer Protection Act 1999 to include a committee to monitor advertisements that were misleading to consumers.

    The amendments would be tabled in Parliament next month, he said, adding that the draft had already been submitted to the Attorney-General’s office.

    fr:thestar.com.my/news/story.asp?file=/2010/2/19/nation/5701069&sec=nation

  27. New subsidy scheme overlooks fuel efficiency, contravenes revised NAP

    KUALA LUMPUR: Two leading luxury carmakers have questioned plans by the Government to link the petrol subsidy to engine capacity, saying such a scheme overlooks fuel efficiency and also incentives to manufacturers under the revised National Automotive Policy (NAP).

    “As BMW Malaysia views the situation, the problem with designing a fuel subsidy programme around the engine capacity of a vehicle is that small engine capacities alone do not necessarily mean better economy,’’ said BMW Group Malaysia managing director Geoffrey Briscoe in an e-mail reply.

    A new fuel subsidy mechanism is set to be announced on May 1 which will see the amount of subsidised fuel based on the engine capacity of a car.

    Reports indicate the amount of subsidised fuel would be capped and limited to cars below 2,000cc and owners of cars with engine capacities bigger than 2,000cc would not enjoy the subsidy.

    The revamp of the fuel subsidy is being done to lessen the financial burden on the Government, which spends billions of ringgit each year to make petrol and diesel affordable to most Malaysians.

    “A new structure, merely based on engine capacity, does not solve any problem,’’ said Mercedes-Benz Malaysia Sdn Bhd in a statement to StarBiz.

    Mercedes-Benz Malaysia is advocating the introduction of better fuel quality in the country so that the company would be able to introduce the latest engine technology in its cars, which is already available elsewhere around the world.

    “This technology will allow for lower emission and lesser fuel consumption. Both factors would contribute to a more sustainable environment. So, fuel consumption is not just about engine capacity but also engine technology,’’ it said.

    Another point Mercedes-Benz Malaysia highlighted was that the upcoming petrol subsidy scheme contravenes the revised NAP.

    “The NAP 2009 liberalises manufacturing passenger vehicles with engine capacity of 1,800cc and above and on the road price of not less than RM150,000,’’ it said.

    “The implementation of two price structures for fuel may not support this new regulation.’’

    While the details are not yet formal, BMW’s Briscoe said should engine capacity be the main criterion for the new fuel subsidy, the move would be another form of “rampant protectionism”.

    “As the price of oil varies according to global influences, it is vital that the Government explores alternative means of reducing the overall cost of driving because, as the oil crisis in 2008 demonstrated, there are times when sustaining the petrol subsidy is simply economically unviable,’’ he said.

    “A more viable option will be to focus on developing incentives which encourage Malaysian drivers and automakers to consider more fuel-efficient alternatives.’’

    He said the Government’s intention to introduce Euro IV standard for diesel by 2011 was one such opportunity for Malaysians to be made aware of the benefits of diesel technology, which include long-term reduction in overall costs.

    He said modern diesel engines were able to consume up to 30% less fuel while at the same time, provide 20% more horsepower and up to 70% better acceleration. The engines are also said to emit 20% less carbon dioxide compared with petrol engines.

    Datuk Mokhzani Mahathir, who is a shareholder of Porsche franchise in Malaysia, too believes the subsidy system based on engine capacity is flawed.

    “I think this is a dangerous precedent where consumers are penalised at the point of sales because of what they have chosen to purchase. The luxury car owner is already penalised via duties, high road tax, high insurance cost, etc,’’ he said in an e-mail reply.

    “There are many ways to help car owners. Shifting the burden to the luxury car market shouldn’t be one of them.’’

    Mokhzani said if the Government wanted to remove petrol subsidies and yet ensure that those in need of assistance would receive it, the recipients had to be first identified to see if they qualified for assistance such as lower road tax, a discount or rebate on petrol purchase.

    This could be done by matching car registration records at the Road Transport Department with employment or Employees Provident Fund records. “Or simply designate various petrol stations for those who are accorded this special petrol price.”

    fr:biz.thestar.com.my/news/story.asp?file=/2010/2/19/business/5702674&sec=business

  28. Government scraps tiered fuel subsidies for simpler ways

    The government is looking at simpler ways to subsidise fuel for consumers after quietly scrapping the proposed tiered fuel subsidies scheduled for May 1 due to its complexity.

    Industry sources said Putrajaya made the decision “recently” after complaints that the new subsidy system which uses MyKad for petrol purchase could be a hassle for consumers and petrol dealers apart from causing congestion at fuel stations.

    “Oil industry executives have been asked to stop implementing the tiered subsidy system as the government has stopped it,” an industry source told The Malaysian Insider.

    A consultant working on the programme confirmed the move, saying “the decision was made fairly recently.”

    “It was just too complex and unwieldy,” he admitted to The Malaysian Insider, referring to the tiered subsidy system.

    Under the programme that was being handled by Malayan Banking Berhad, motorists had to register using their Mykad to be eligible for some subsidy for one vehicle from May 1.

    However, petrol dealers complained of additional costs despite making only 12.19 sen per litre for petrol and seven sen per litre for diesel. RON95 petrol is currently sold at RM1.80 a litre, RON97 and diesel at RM2.05 and RM1.70 a litre respectively. Shell is the only retailer selling the premium RON 97 Shell V Racing at an unsubsidised price of RM2.38 a litre.

    The government has never revealed the tiered fuel subsidy system but went only as far to say that foreigners would not be eligible for subsidised prices. Fuel prices in Malaysia are cheaper than neighbours Indonesia, Singapore and Thailand.

    Foreign motorists are only allowed to buy fuel up to 20 litres within 50km of the borders except for the unsubsidised premium Shell V Racing petrol.

    “Now the authorities will find another way to implement subsidies without burdening the public and the petrol dealers,” the industry source added.

    There is speculation that the government will raise retail prices by 10 sen in the short-term while mulling proposals for a better subsidy system. Global oil prices have steadily risen and are now at US$79 (RM269) a barrel.

    In 2007, the authorities raised retail prices until they peaked at RM2.70 a litre leading to widespread protests and contributed to the ruling Barisan Nasional’s historic losses in Election 2008. It is learnt that Prime Minister Datuk Seri Najib Razak is keen to avoid protests that helped drive predecessor Tun Abdullah Ahmad Badawi out of office.

    This is not the first time that the Najib Administration has pulled back an unpopular move before it is implemented. Last December He retracted an unpopular 5 per cent Real Property Gains Tax (RPGT) Budget 2010 proposal for properties sold after five years.

    Businessmen complained the move was unfair as it the RPGT was meant to cool down speculation in the property market, not tax those who are genuinely selling after holding their properties for a reasonable amount of time.

    For the petrol subsidies, Petrol Dealers Association of Malaysia (PDAM) president Datuk Hashim Othman anticipated a longer time to process transactions as biometrics have to verify the vehicle owner’s identity through thumbprint scanning and this could lead to possible congestion at the petrol stations.

    “Experts in the field may say it is applicable but people on the ground are worried that the thumbprint scan, which is similar to the practice in the airport, may delay transactions and create congestion at petrol stations,” The Star quoted him as saying this week.

    Hashim had said the government was still negotiating the quota of fuel subsidy that each car owner would be entitled to.

    “The idea to give fuel subsidy to deserving people is good but we are worried that the system may be complicated and cannot address arising problems.”

    Deputy Domestic Trade, Co-operatives and Consumerism Minister Datuk Tan Lian Hoe, when met at the Perak Chinese Chambers of Commerce and Industry Chinese New Year open house on Monday, said her ministry was still gathering feedback on the matter from the people.

    fr:themalaysianinsider.com/index.php/malaysia/54203-government-scraps-tiered-fuel-subsidies-for-simpler-ways-

  29. Good it is shelved!

    How much Public money has wasted due this issue?

    ——————-

    Fuel subsidy scheme shelved, originally set to be implemented on May 1

    PETALING JAYA: The Government’s proposed fuel subsidy scheme based on the engine capacity of vehicles has apparently been shelved.

    Sources indicate that the plan, which was originally set to be implemented on May 1, will not proceed even though a lot of the preparatory work has entered the final stage.

    “We were so close to getting this off the ground,’’ said a source.

    The Government had planned to introduce a tiered pricing system for petrol, depending on engine capacity, while foreigners would have to pay the market price.

    According to reports, the plan called for the mandatory use of MyKad to differentiate Malaysians from foreigners, requiring the need for MyKad readers at petrol stations.

    Subsidised petrol would be capped to a certain amount of litres a month per user for owners of vehicles with engine capacities of below a certain threshold. The reported upper limit eligibility for the petrol subsidy is 2,000cc. Owners of cars with bigger engine capacities would be exempted from the subsidy.

    However, many had considered the proposed scheme to be very unfavourable and cumbersome to enforce and some have suggested that the subsidy itself should be removed.

    RAM Holdings Bhd chief economist Dr Yeah Kim Leng said scrapping the scheme and moving to a “fully market-driven” system was a better option in the long run.

    “The public has to realise the fuel subsidy scheme is not sustainable as it impacts the Government’s finances. Removing the subsidy would reduce over-consumption and promote more efficient use of our country’s resources,” he said when contacted by StarBiz.

    Yeah said many countries, including Indonesia and Sri Lanka, were practising a free-float system, where fuel prices were based on global oil prices.

    “This is the ideal but Malaysia is accustomed to subsidised prices. From an economic standpoint, it is not sustainable.”

    Yeah said removing the fuel subsidy completely would create short-term strain on the lower income group as they would have difficulty coping with the sharp increase (in fuel prices).

    “The best thing to do is to gradually reduce the fuel subsidy or it would create inflationary pressure.”

    Yeah said the proposed tier system was unfair and vulnerable to abuse.

    “It is unfair from the individual perspective because everyone is entitled to equal fuel subsidy levels.”

    He also cited the case where some fishermen were purchasing diesel at subsidised prices and were selling it for profit.

    “Owners of lower cc engine cars could sell their entitlement to owners of higher cc vehicles. This situation could crop up if the system is not watertight.

    “Principally, it (the tiered fuel subsidy scheme) seems desirable but administratively, it is no go,” said Yeah.

    An analyst from a local bank-backed brokerage said the tier system would be difficult to monitor and the Government should do away with the fuel subsidy scheme.

    “The only way to become a high-income nation is to remove the fuel subsidy. There would be near-term implications but eventually the public will be able to adjust. The removal should however be gradual,” he said.

    He also said the Government should improve its public transport infrastructure if it were to reduce or remove fuel subsidies.

    “The Government could also do away with excise duties (for imported vehicles) but I don’t think that would happen any time soon.”

    Mercedes-Benz Malaysia Sdn Bhd vice-president of sales and marketing for passenger cars Florian Mueller said he could identify with the Government’s decision to introduce a fuel subsidy scheme.

    “In the long run, the Government is looking at how to reduce fuel consumption. I think the best thing to look at next is how we can encourage people to purchase vehicles with the latest technology or encourage the manufacturer to build car engines with lower fuel consumption.

    “This would also encourage other players to introduce technology that encourages fuel saving. The Government could also make it mandatory for car owners to replace old engines if they are not fulfilling emission standards, just like they do in Europe.”

    fr:biz.thestar.com.my/news/story.asp?file=/2010/2/25/business/5741670&sec=business

  30. Another case of flip-flop decisions

    IT was reported that the Government may shelve the proposal for new petrol subsidy scheme scheduled for May 1. This will be another case of flip-flop decisions after the recent end-of-life policy for vehicles, etc.

    I believe proper study and consideration were not done before announcements were made. It seems that the Government announced them first, then only set up a task force to look into the implementation.

    How many manhours were spent on proposing, discussing, drafting and approving these policies? And how many manhours were wasted on reviewing, discussing and retracting these policies? Translate that into ringgit, how much was wasted? Is this in line with the “Performance Now” concept?

    RONIN TAY,
    Kuala Lumpur.

    fr:thestar.com.my/news/story.asp?file=/2010/3/2/focus/5756818&sec=focus

  31. Government confirms tiered fuel subsidies scrapped

    The government confirmed today that a controversial tiered fuel subsidy has been scrapped, and that the current system of subsidising petrol would be maintained.

    Domestic Trade Minister Datuk Seri Ismail Sabri Yaakob made the announcement today, confirming a report last month in The Malaysian Insider.

    “The government will maintain the current subsidy system. Nothing has changed,” said Ismail.

    He told reporters that a “subsidy rationalisation lab” would instead be set up to review all forms of subsidy, including for food and petrol.

    The Malaysian Insider had reported last month that the government was looking at simpler ways to subsidise fuel for consumers, after quietly scrapping the proposed tiered fuel subsidies scheduled for May 1 due to its complexity.

    Industry sources had said Putrajaya made the decision “recently” after complaints that the new subsidy system, which uses the MyKad for petrol purchase, could be a hassle for consumers and petrol dealers apart from causing congestion at fuel stations.

    Under the proposed tiered subsidy programme that would have been handled by Malayan Banking Berhad, motorists had to register using their Mykad to be eligible for some subsidy for one vehicle from May 1.

    However, petrol dealers complained of additional costs despite making only 12.19 sen per litre for petrol and seven sen per litre for diesel. RON 95 petrol is currently sold at RM1.80 a litre, while RON 97 and diesel are RM2.05 and RM1.70 a litre respectively. Shell is the only retailer selling the premium RON 97, Shell V Power Racing, at an unsubsidised price of RM2.38 a litre.

    The government has never revealed the tiered fuel subsidy system but went only as far as to say that foreigners would not be eligible for subsidised prices. Fuel prices in Malaysia are cheaper than neighbours Indonesia, Singapore and Thailand.

    Foreign motorists are only allowed to buy up to 20 litres of fuel within 50km of borders, except for the unsubsidised premium Shell V Power Racing petrol.

    There was speculation that the government will raise pump prices by 10 sen in the short-term, while mulling proposals for a better subsidy system. Global oil prices have steadily risen and are now at US$79 (RM269) a barrel.

    In 2007, the authorities raised retail prices until they peaked at RM2.70 a litre, which led to widespread protests and contributed to the ruling Barisan Nasional’s historic losses in Election 2008. It is learnt that Prime Minister Datuk Seri Najib Razak was keen to avoid the protests that helped drive predecessor Tun Abdullah Ahmad Badawi out of office.

    This is not the first time that the Najib Administration has pulled back an unpopular move before it was implemented. Last December, he retracted an unpopular five per cent real property gains tax (RPGT), proposed in Budget 2010, for properties sold after five years.

    Businessmen complained the move was unfair as the RPGT was meant to cool down speculation in the property market, not tax those who were genuinely selling after holding their properties for a reasonable amount of time.

    “After receiving all sorts of feedback from regarding this matter, the goverment has decided not to carry on with the proposed restructuring of fuel subsidies.

    “This decision clearly shows that the government is always concerned about the views of its people,” said Ismail who refuted claims that the government had been pressured to make the call and that it was a carefully deliberated move.

    However, he did admit that the feedback from the public was generally more negative than positive.

    “Actually, the proposed system using Mykad is ready, and contrary to concerns, it would have only taken a few seconds for a transaction. It’s a very simple process, it is not because the matter could not be executed,” quipped the Minister.

    He told The Malaysian Insider shortly after the press conference that he believed that Malaysians generally were not ready for any change in the current system, or even a removal of the fuel subsidy altogether.

    “I think for now, this is how it has to be. Malaysians are not ready yet for changes, unlike other countries,” he added.

    It is understood that in order to maintain the price of fuel and diesel the government had in 2009 spent RM3.4 billion for petrol and RM1.9 billion for diesel.

    The government is also currently subsidising 16sen per litre for RON 97 petrol and 39sen per litre for RON 95 petrol.

    In 2007, the authorities raised retail prices until they peaked at RM2.70 a litre, which led to widespread protests and contributed to the ruling Barisan Nasional’s historic losses in Election 2008. It is learnt that Prime Minister Datuk Seri Najib Razak was keen to avoid the protests that helped drive predecessor Tun Abdullah Ahmad Badawi out of office.

    This is not the first time that the Najib Administration has pulled back an unpopular move before it was implemented. Last December, he retracted an unpopular five per cent real property gains tax (RPGT), proposed in Budget 2010, for properties sold after five years.

    Businessmen complained the move was unfair as the RPGT was meant to cool down speculation in the property market, not tax those who were genuinely selling after holding their properties for a reasonable amount of time.

    fr:themalaysianinsider.com/index.php/malaysia/55222-government-confirms-tiered-fuel-subsidies-scrapped

  32. Kit Siang wants minister in charge of fuel subsidy sacked

    KUALA LUMPUR, March 4 — DAP’s Lim Kit Siang wants the Minister of Domestic Trade, Co-operatives and Consumerism sacked following the government’s decision to scrap the controversial tiered fuel subsidy.

    Domestic Trade Minister Datuk Seri Ismail Sabri Yaakob made the announcement today, confirming The Malaysian Insider’s report last month.

    “The government will maintain the current subsidy system. Nothing has changed,” said Ismail.

    “This shows total ineffectiveness and incompetence on the part of the government. Millions have been spent to implement a two-tier fuel subsidy system using the Mykad system, now what’s going to happen to the money spent?

    “This reflects very poorly on the minister concerned. In other countries, when faced with a situation like this, a minister would immediately have resigned. This shows that the government is not taking serious responsibility for their actions,” said Lim.

    He lashed out at Prime Minister Datuk Seri Najib Razak’s plan to move Malaysia forward as a farce, stating that “if Najib was serious, he should sack the minister in charge.”

    His views were also shared by Petaling Jaya Utara MP Tony Pua, who claimed that the government’s plans in implementing the tiered fuel subsidy was “shrouded in secrecy and lacked any detail.”

    “The concept was doomed from the start. Not only was the scheme impractical, but there was reluctance on the part of the government to discuss any nature of the plan with MPs, the public or even NGOs,” said the DAP man.

    Pua also slammed the government for not being transparent about the amount of money that had already been spent on the now-scrapped scheme.

    “Hundreds of millions have been spent to implement this, the government must show how much of public funds have been wasted on this.

    “Maybank, Iris had been approached as contractors for this, with each company spending tens of millions to implement the Mykad system at petrol kiosks. What happens to the money now?

    “This is a question of transparency. All this could have been avoided if the government had been open and clear with each step of their plans,” claimed Pua.

    The Malaysian Insider had reported last month that the government was looking at simpler ways to subsidise fuel for consumers, after quietly scrapping the proposed tiered fuel subsidies scheduled for May 1 due to its complexity.

    Industry sources had said Putrajaya made the decision “recently” after complaints that the new subsidy system, which uses the MyKad for petrol purchase, could be a hassle for consumers and petrol dealers apart from causing congestion at fuel stations.

    Under the proposed tiered subsidy programme that would have been handled by Malayan Banking Berhad, motorists had to register using their Mykad to be eligible for some subsidy for one vehicle from May 1.

    However, petrol dealers complained of additional costs despite making only 12.19 sen per litre for petrol and seven sen per litre for diesel. RON 95 petrol is currently sold at RM1.80 a litre, while RON 97 and diesel are RM2.05 and RM1.70 a litre respectively.

    Shell is the only retailer selling the premium RON 97, Shell V Power Racing, at an unsubsidised price of RM2.38 a litre.

    The government has never revealed details of the tiered fuel subsidy system but went only as far as to say that foreigners would not be eligible for subsidised prices. Fuel prices in Malaysia are cheaper than neighbours Indonesia, Singapore and Thailand.

    Foreign motorists are only allowed to buy up to 20 litres of fuel within 50km of borders, except for the unsubsidised premium Shell V Power Racing petrol.

    There was speculation that the government will raise pump prices by 10 sen in the short-term, while mulling proposals for a better subsidy system. Global oil prices have steadily risen and are now at US$79 (RM269) a barrel.

    In 2007, the authorities raised retail prices until they peaked at RM2.70 a litre, which led to widespread protests and contributed to the ruling Barisan Nasional’s historic losses in Election 2008. It is learnt that Prime Minister Datuk Seri Najib Razak was keen to avoid the protests that helped drive predecessor Tun Abdullah Ahmad Badawi out of office.

    This is not the first time that the Najib Administration has pulled back an unpopular move before it was implemented. Last December, he retracted an unpopular five per cent real property gains tax (RPGT), proposed in Budget 2010, for properties sold after five years.

    Businessmen complained the move was unfair as the RPGT was meant to cool down speculation in the property market, not tax those who were genuinely selling after holding their properties for a reasonable amount of time.

    fr:themalaysianinsider.com/index.php/malaysia/55235-kit-siang-wants-minister-in-charge-of-fuel-subsidy-sacked

  33. Fuel prices set to rise

    PETALING JAYA: The Government is likely to revert to slight increases in fuel prices over time now that it has been officially announced that the proposed two-tier fuel subsidy scheme based on vehicle engine capacity has been scrapped, analyst and economists say.

    The proposed fuel subsidy scheme was originally set to be implemented on May 1.

    Maybank Investment Bank analyst Mohd Khair Mirza said: “We may see an increase of about 10 sen in petrol prices post May 1.” He added that it was the only viable option for the moment unless the Government came out with a better fuel subsidy scheme.

    Mohd Khair said the two-tier fuel subsidy scheme proposed in theory appeared good on paper but issues such as implementation and enforcement were questionable.

    He said: “At least with the slight increase in fuel prices over time it is applied across the board and the Government is able to close the gap on the fuel subsidy which remains unsustainable.”

    Mohd Khair said that based on US$80 per barrel of crude oil, the Government was currently subsidising fuel at the pump at around 40 sen per litre.

    An economist from a rating agency said although the proposed two-tier fuel subsidy scheme has been scrapped, it should not deter the Government from continuing to look for other schemes that were more practical and viable.

    He said a viable scheme should meet two objectives – ensure the hardcore poor are not badly affected and address the fuel subsidy.

    A local economist from a broking house said the Government’s decision to scrap the proposed two-tier fuel subsidy scheme based on vehicle engine capacity came as no surprise.

    “We figured it (scrapping of the scheme) would happen. There was a lot of talk that the subsidy scheme was not practical, despite a lot of effort by the Government to implement it,” he said.

    The economist believed some individuals were waiting to exploit the scheme (if implemented) thinking they could benefit from the scheme.

    “Thankfully the Government realised the proposed subsidy scheme was not foolproof and decided to scrap it,” he said.

    fr:biz.thestar.com.my/news/story.asp?file=/2010/3/5/business/5800174&sec=business

  34. RON 97 price hike hits high-end users

    PETALING JAYA: The five-sen hike of RON 97 petrol to RM2.15 per litre from yesterday has mostly affected a small group of luxury car owners and those who favour its performance capabilities compared to the more affordable RON 95 which is still sold at RM1.85 per litre.

    Animation designer Joey Khor, 32, who drives a 3.5-litre Nissan Fairlady sports car, said he might have to sell his car if the petrol cost becomes too hard to bear.

    “I am already spending RM150 for a full tank, which will last me around three to four days. That means RM300 in a week, and RM1,200 spent on petrol in a month,” he added.

    Car mechanic Novie Ismail, 34, said he spends about RM400 a month on petrol for his three cars: Volvo 24 SE, Proton Satria and Charade Aura.

    “I’ll just have to bear with the RON 97 price hike as I feel that RON 95 affects the performance of my cars. The engines sound rougher and generate less power,” he said.

    Meanwhile, Petrol Dealers Association Malaysia president Datuk Hashim Othman said the price increase was a natural consequence of rising oil prices in the international market.

    He estimated that about 75% to 80% of motorists were RON 95 users and would thus remain unaffected.

    “Don’t be too upset by the controlled float (of RON 97), as the Government plays an important role in ensuring that the oil companies do not hike petrol prices drastically,” said Hashim, pointing out that RON 97 sells for around RM3.80 per litre in Thailand.

    “The public should be aware that the Government does not impose any tax on the sale of RON 97 but does not subsidise it either,” he said.

    The previous petrol price hike, which took effect on July 16, was part of the Government’s effort to save an estimated RM750 million a year.

    Deputy Domestic Trade, Co-operatives and Consumerism Minister Datuk Rohani Abdul Karim told the Dewan Rakyat that the price increase reflected the global price increase of fuel and announcements would not be made in the future about price changes.

    She added that a committee comprising officials from the Finance Ministry and her ministry would monitor and determine the price since RON 97 was subjected to a managed float.

    fr:thestar.com.my/news/story.asp?file=/2010/11/3/nation/7348742&sec=nation

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