Monday, June 2, 2008

Najib: Think Again !

Hantu Laut

The Deputy Prime Minister Najib Abdul Razak said the government has postponed its decision to ban sale of fuel to foreign registered cars within 50 miles radius of any border which was supposed to commence on Friday. It ultimately aims to increase the price of fuel throughout the country for foreign cars.

The reason for the postponement was not stated but it is safe to assume that the government are not sure how to go about doing it and the repercussions it may have on other industry with possible negative outflow on tourism.

The idea of having separate pumps for foreign cars would require additional capital expenditure and may lead to abuses by dishonest dealers who still can sell the cheaper fuel at their own price to foreign cars, cheaper than the fixed price for foreign cars but slightly more than the domestic price and pocket the difference in pricing.The Singaporeans and Thais would be happy to collaborate to get the cheaper fuel and make the dealer slightly richer. Do not underestimates Malaysians tendency and capacity for cheating and do not overestimates the effectiveness of our enforcement authorities. Most of the time the crooks got away.

Corruption, smuggling, abuse of power are just some of the examples of cheating in this country, which run into billions of ringgits every year.

A civil servant friend once told me how he is getting sick of politicians making high moral sounding speeches telling civil servants to discharge their duties honestly and not to be corrupted. He said "I get sick in the stomach every time I listen to those bastards telling us not to be corrupted as if we don't know that they are stealing billions from the nation like there is no tomorrow.They are just like fishes, when it starting to rot, it stinks at the head and than the rest of the body follows. They are the heads, we, the civil servants are the bodies, when they stinks, we stinks too". He said if the politicians are honest, uncorruptable and dedicated, majority of civil servants would follow suit.It's called leading by examples but, unfortunately, that has never been the case.

Would it be a wise move to have two-pricing system, one for domestic car and the other for foreign cars and what would be the saving in monetary term or would it have a negative impact on tourism in the country?

The top tourist arrivals by nationality in 2007 are shown below:

Singapore 10,492,692
Indonesia 1,804,535
Thailand 1,625,698
Brunei 1,172,154
China 689,293

(Source:Malaysia Hotel News)

Singaporeans are the biggest contributor to our tourism dollar.

Assuming 80% of Singaporeans,Thais and Bruneians entered the country by roads in cars,coaches and by trains.

There were 10,632,251 visitors in 2007. Assuming only 50% of the figure were true paying tourists,we would still have 5,316,125 visitors, majority of which probably came in their own cars. Let say we put a hypothetical figure of 3 persons to a car, we would have 1,772,041 cars entering the country and assuming they spend an average of RM300.00 on petrol per car, the total bill at current price would be RM532 million per year for foreign cars.Assuming the government increases the pump price for foreign cars by 100%, the total bill would be in the region of RM1.064 billions per year unsubsidised.

The total tourist receipts for 2007 was RM46.1 billions.It is safe to assume that 50-60% of the receipts were contributed mainly by Singaporeans,Thais and the other top arrivals.That's a whopping RM23 billion or more in tourism money, just losing 10% 0f it would mean RM2.3 billion gone, which is much more than the total revised fuel bill.

The net benefits to the government by increasing the price of petrol for foreign cars seemed negligible and not worth the effort.On the other hand it may loses the spin-offs from tourism if there were to be reduction of tourist arrivals due to the higher cost of fuel.

Government should not just look at what it pays directly out of the subsidy but should look at the bigger picture of the spin-offs from the industry.

To control and lessen the selling of subsidised fuel to foreign cars, the government should make it mandatory for all foreign cars entering the country to have minimum 3/4 tank of petrol.Any car that failed to comply with the ruling should be fined on the spot with a fixed amount set by the government.

With the 3/4 tank ruling those trying to buy cheap fuel at border towns would be weeded out and the bona fide tourists wouldn't be punished and the country continue to get its tourism spin-offs.

The Deputy Prime Minister Najib Abdul Razak said that Singaporeans are saying they don't mind paying the market rate.That's probably just lip service. The Singapore government for sure don't want the Singaporeans to come to Malaysia to spend their money here.Don't forget they have 3/4 tank ruling on Singapore cars leaving the island for Malaysia for many years now.

The best solution is to remove the entire subsidy on petrol and diesel and have one price structure.The government should only keep the subsidy on essential items such as cooking gas, rice and other essential foodstuffs for the sake of the poor and those in the low income bracket.

The RM56 billion subsidy spent on petrol and diesel is more than sufficient to improve the public transportation systems in the major cities and towns which will ease the burden of car ownership of those in the lower and middle income group.

Many Malaysians in that income group are living beyond their means, a culture infused during the Mahathir's era of making car ownership easily available to those who hardly can afford it, just to satisfy his industrialisation programme and show the world 'Malaysia Boleh' . Removing the subsidy on petrol and diesel and providing the people with better public transport would help those foolish Malaysians to get rid of the car they can ill afford.

Those in the lower income group spent over 50% of their monthly income to service the repayment,maintenance and repair of their cars with very little left for food, clothing and medical care. Some took to crime to supplement their income.

It is a complete fallacy to think that the poor and those in the lower income group are the one who benefited from the subsidy. If you don't own a car the price of petrol or diesel will have no impact on your daily lives other than the slight increase in the costs of living, the indirect results of the higher fuel cost.

The subsidised fuel are more benefiting to the upper middle class and wealthy Malaysians, those with their posh gas-guzzling monsters and multiple cars owners.

Maybe, now is the time to teach Malaysians how not to live with a subsidy mentality.

Footnote:
(For a small country, population of 380,000, the figure for Brunei seems odd.With that figure every Bruneian visited Malaysia an average of 3 times in 2007.The only plausible explanation, those are Bruneians going to and fro to the other side of Brunei separated by Limbang in Sarawak. They were all not tourists in the real sense, went through Malaysian Immigration in Sarawak, and were included in Malaysia's fallacious and sexed up statistics as tourists). See map below.

Map of Brunei

2 comments:

kadayanjournal said...

You are right! I have not really read how the Ministry handles this issue-but my initial remark as of now -'these' people-polticians of our are stupid!. They talked in high pitch but can they not think, their status as visitors as you have calculated the cost and the benefit at the end to the day. Now you drive them away. Might as well put bill boards up saying visitors NOT welcome anymore

Peninsular boy said...

I got it. You know I needed such analysis.


But one thing sir, what about Badawi's foray into Sabah. Did it hlp? Cool off the defections? satisfied Sabahans? And many more questions in this dirction. May be you shed light on this.