Saturday, June 7, 2008

Does oil subsidy waste our survival ?

How can oil subsidy be considered as a waste for Malaysians.

Oleh Tulang Besi

Malaysiakini reports that the government is planning to raise the petrol prices of the country to market level (RM4 per liter). It seems that the government is planning to introduce a completely different system of subsidy distribution. Even though the details of the plan is still unclear, we Malaysians should be very worried. I also do not understand why there is so much noise about the oil subsidy being a wastage. Our government wastes much more on corruption, cronycism, nepotism and inefficiency. Instead of making so much noise on subsidies, the government should instead make efforts to reduce corruption to a zero. If the government can control corruption and abuse effectively, I am more than sure that the RM56billion spent on subsidies can easily be recuperated.
In fact, I feel that the government will only waste all the so-call savings down the path of corruption and abuse, while the people have their lives made difficult by further beareaucracy just to save on fuel spending.

It is so typical of the Barisan Nasional government that whenever there is a problem with the country, it’s the people that has to pay for it. In the case of the oil subsidy, since it’s getting too expensive for the government to maintain, they will now transfer the cost to the people.

Bear in mind, that the phrase “expensive to the government” means “less money for cronies and “rent seekers” in UMNO. There’ll be less money for th 4th floor boys and the family of Pak Lah to squander, there’ll be less money for expensive but useless projects to make BArisan Nasional cronies rich, there’ll be no more money for useless and wasteful joint venture projects like the one recently exposed by MB of Selangor and many, many more examples.

Barisan Nasional, being corrupted as they are, will not want this to happen and as usual the cost will be transferred to the people. Their way of life must never be compromised.

Also, why complaint about subsidy now? When the price of oil was low, there was no subsidy. And the price of oil will decrease sometime in the future, as supply adjusts itself to the demand. Then, when the price of oil decrease, the amount we have paid now will be recuperated even more.

Datuk Shahrir proposal is a disaster waiting to happened. It will only introduce further unnecessary and ineffective beareaucracy. If he is worried about foreign cars filling their tanks in our gasoline stations, then we should just charge these foreign cars different prices. After all, what’s so difficult about identifying foreign cars. Their number plates are very much different than ours and their road tax is also different.

Why do we go to so much length for a problem that is so simple to overcome?
I am aware of the argument that subsidies are a waste of resources. My belief is that these arguments are made by economists bent on making the rich more rich. How can subsidies be considered as a waste when they make the lives of the people better, they help to improve the quality of life, they put money into the pockets of ordinary people? Please tell me how is this a waste? Isn’t the role of a government to make the lives of it’s subject better?

While it is true that the world’s oil prices is rising due to ever increasing international demands, Malaysia should realize that we are a oil net-exporter country. Malaysia should be shielded by the increase in oil prices. I never did understand why the rising oil prices would be a big problem to us Malaysians.

Even if our oil price is cheaper then our neighbors (except Brunei), it seems that we are more expensive in other departments automobile wise. For instance, automobiles are much cheaper in Indonesia then Malaysia. For example, a Toyota Avanza in Indonesia is at least RM20k cheaper than ours. A Honda City, is at least RM10-15k cheaper than in Malaysia.

As for Singapore, they have the best public transportation system in South East Asia. They, therefore, do not need to subsidize their petroleum for their citizens.

Remember, our public transport system is still atrocious and unreliable. People have to drive just to go to the nearest LRT station. When, the right approach would be to have LRT station at every housing areas. So, how can the people travel with a clear mind when the BArisan Nasional government have no regards to the problem of the people.

Until we have a public transport system comparable to Singapore, I say the subsidy will have to stay.

Lastly, this is nothing more than an attempt by Barisan Nasional to further protect their hegemony and economic monopoly via their corrupt and decadent practices. Since the government is facing a shortage of cash, therefore the people will have to subsidize Barisan Nasional network of corruptors.

Here are a few options that I would like to propose which can be adopted immediately for immediate savings. Remember that the figures I listed below are all estimation.

1. Repeal all laws related to infringement of freedom of media i.e. Printing and Presses Act, Police Act etc. With a free and vibrant media, the level of corruption will be seriously reduced in a very short period of time. This will effectively reduce government spending. NET SAVINGS in one YEAR: RM 5billion minimum

1. Cancel all IPP’s that is supplying energy to TNB for an inflated rate. Let TNB run all their power plants. After all, the amount of electricity generated by TNB is already exceeding the need of the country. ESTIMATED NET SAVINGS: RM 10billion

1. Make Petronas reports it’s earnings and losses to Parliament. By doing so, Pertonas funds would be more transparent and less prone to abuses by UMNO’s “rent-seekers”. Not to mention the multiplying effects to our country’s economy when Petronas funds are spent properly. ESTIMATED NET SAVINGS: RM 10 billion minimum (Estimated GDP contribution: RM 10 billion). TOTAL : RM 20 billions.

1. Government should encourage “Work From Home” program for all corporations since this will reduce travelling of employees getting to work. This will reduce usage of petroleum significantly. I estimate at least 20% of normal consumption thus reducing burden of subsidy. ESTIMATED NET SAVINGS: RM 10 billion

1. Make all government projects “open tender” which will result in further savings to the government for all the projects spent. ESTIMATED NET SAVINGS: RM 15 billions

1. For major corporations (the real major user of oil), the government can charge “Affluent tax” on them for the amount of oil they use. If their usage is more than what they require, the government can tax them, or reduce subsidy. This is to prevent waste in use of oil and energy. NET EARNINGS ESTIMATED: RM 5 billions.

Should there be any spending, then it should be spent on:
1. Spend on alternative energy proposal. Petronas already have an NGV engine. TNB can start exploring wind energy initiative. Telecom and TM Net can start spending on better and more reliable broadband infrastructure which will make travelling less of a requirement. ESTIMATED SPENDING: RM 10 billions

1. Improve public transport drastically. All the people I know would opt for reliable public transport then driving because it’s better that way. ESTIMATED SPENDING IN A YEAR : RM 10 billion

Therefore, let’s all do the mathematics:

Please bear in mind that RM 11 billion is nothing compared to the revenue Petronas is generating due to rise in oil prices.

It seems that if the government reduce corruption, introduce more transparency, and implement serious programs to reduce oil consumptions, and are serious in combating cronyism, nepotism and corruption, tax the real waster and polluters, we do not really have to reduce the burden of subsidy.

source from : tranungkite.

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