Hantu Laut
Received in my email the letter below from a friend.
The letter was authored by an employee of Petronas who took it on himself to clarify the actual position and the inner workings of the organisation to counter the myth about the company.
I leave it to my readers to decide the veracity or mendacity of the story.
Dear all,
After reading all the chain mails and blogs, I feel called to reply, because of the relentless attacks and allegations -- most of which are inaccurate or baseless -- against PETRONAS.
PETRONAS' STAFF SALARY & BONUS
1) The salaries paid to PETRONAS' employees are not as high as people think. At best, they are just industry average. And these are not attractive enough for some who left PETRONAS to find work at other companies (mainly from the Middle East) which are willing to pay more. Why do they pay more? The oil and gas industry worldwide has been facing acute shortage of qualified or experienced personnel, so most companies are willing to pay lots of money to entice and pinch staff from their competitors.
Bonus? There has NEVER been a bonus amounting to 6 months or 12 months throughout the 33 years. On average, it is 2 months. But don't ever think we don't deserve it. We more than deserve it. A lot of us work really hard, some in the most extreme of conditions. Those who have been to and worked in northern Sudan, for example, would testify that it's like working in a huge blower oven. Southern Sudan, on the other hand, is almost all swamps and mud. Imagine having to go through that kind of heat, or waddling in muddy swamps, day in and day out.
QUALITY OF CRUDE & REFINED PRODUCTS
2) Malaysia produces about 600,000 barrels of crude oil per day (and about 100,000 barrels condensate). Of this crude volume, 339,000 barrels are refined locally for local consumption. The rest is exported (and yes, because it has lower sulphur content it fetches higher prices).
Malaysia also imports about 230,000 barrels of crude oil per day, mainly from the Middle East, to be refined here. This crude oil contains higher sulphur and is less expensive (so the country gains more by exporting our crudes). In Malaysia, this crude is processed by PETRONAS at its second refinery in Melaka, and also by Shell at its Port Dickson refinery.
Different refineries are built and configurated to refine different types of crude. And each crude type yields different percentage of products (diesel, gasoline, kerosene, cooking gas etc) per barrel.
But most importantly, products that come out at the end of the refining process have the same good quality regardless of the crude types. That's why PETRONAS, Shell and Exxon Mobil share the same pipeline to transport the finished products from their refineries to a distribution centre in the Klang Valley. The three companies collect the products at this centre accordingly to be distributed to their respective distribution networks. What makes PETRONAS' petrol different from Shell's, for example, is the additive that each company adds.
PETRONAS' ROLE, FUNCTION & CONTRIBUTION
3) A lot of people also do not understand the role and function of PETRONAS, which is essentially a company, a business entity, which operates on a commercial manner, to mainly generate income and value for its shareholder. In this case, PETRONAS' shareholder is the Government.
In 1974, when PETRONAS was set up, the Government gave PETRONAS RM10 million (peanuts, right?) as seed capital. From 1974 to 2007, PETRONAS made RM570 billion in accumulated profits, and returned to the Government a total of RM335.7 billion. That is about 65% of the profits. That means for every RM1 that PETRONAS makes, 65 sen goes back to the Government.
Last year, PETRONAS made a pre-tax profit of RM86.8 billion. The amount given back to the Government (in royalty, dividends, corporate income tax, petroleum products income tax and export duty) was RM52.3 billion. The rest of the profit was used to pay off minority interests and taxes in foreign countries (about RM7.8 billion - PETRONAS now operates in more than 30 countries), and the remaining RM26.7 billion was reinvested. The amount reinvested seems a lot, but the oil and gas industry is technology- and capital-intensive. Costs have gone up exponentially in the last couple of years. Previously, to drill a well, it cost about US$3 million; now it costs US$7 million. The use of rigs was US$200,000 a day a couple of years ago; now it costs US$600,000 a day.
A lot of people also do not realise that the amount returned by PETRONAS to the Government makes up 35% of the Government's total annual income, to be used by the Government for expenditures, development, operations, and yes, for the various subsidies. That means for every RM1 the Government makes, 35 sen is contributed by PETRONAS.
So, instead of asking what happens to PETRIONAS' money or profits, people should be questioning how the money paid by PETRONAS to the Government is allocated.
CRUDE EXPORTS & FUEL PRICES
4) A lot of people also ask, why Malaysia exports its crude oil. Shouldn't we just stop exporting and sell at cheaper prices to local refiners? If Malaysia is an oil exporting country, why can't we sell petrol or diesel at cheaper prices like other oil producing countries in the Middle East?
I guess I don't have to answer the first couple of questions. It's simple economics, and crude oil is a global commodity.
Why can't we sell petrol and diesel at lower prices like in the Middle East? Well, comparing Saudi Arabia and other big producers to Malaysia is like comparing kurma to durian, because these Middle Eastern countries have much, much, much bigger oil and gas reserves.
Malaysia has only 5.4 billion barrels of oil reserves, and about 89 trillion cubic feet of gas. Compare that to Saudi Arabia's 260 billion barrels of oil and 240 trillion cubic feet of gas.
Malaysia only produces 600,000 barrels per day of oil. Saudi Arabia produces 9 million barrels per day. At this rate, Saudi Arabia's crude oil sales revenue could amount to US$1.2 billion per day! At this rate, it can practically afford almost everything -- free education, healthcare, etc, and subsidies -- for its people.
But if we look at these countries closely, they have in the past few years started to come up with policies and strategies designed to prolong their reserves and diversify their income bases. In this sense, Malaysia (and PETRONAS) has had a good head start, as we have been doing this a long time.
Fuel prices in Malaysia is controlled by the Government based on a formula under the Automatic Pricing Mechanism introduced more than a couple of decades ago. It is under this mechanism that the complex calculation of prices is made, based on the actual cost of petrol or diesel, the operating costs, margin for dealers, margin for retail oil companies (including PETRONAS Dagangan Bhd) and the balancing number of duty or subsidy. No retail oil companies or dealers actually make money from the hike of the fuel prices. Oil companies pay for the products at market prices, but have to sell low, so the Government reimburses the difference -- thus subsidy.
Subsidy as a concept is OK as long as it benefits the really deserving segment of the population. But there has to be a limit to how much and how long the Government should bear and sustain subsidy. An environment where prices are kept artificially low indefinitely will not do anyone any good. That's why countries like Indonesia are more pro-active in removing subsidies. Even Vietnam (which is a socialist country, by the way) is selling fuel at market prices.
PETRONAS & TRANSPARENCY
5) I feel I also need to say something on the allegation that PETRONAS is not transparent in terms of its accounts, business transactions etc.
PETRONAS is first and foremost a company, operating under the rules and regulations of the authorities including the Registrar of Companies, and the Securities Commission and Bursa Malaysia for its listed four subsidiaries (PETRONAS Dagangan Bhd, PETRONAS Gas Bhd, MISC Bhd and KLCC Property Holdings Bhd.
PETRONAS the holding company produces annual reports which are made to whomever wants them, and are distributed to many parties and places; including to the library at the Parliament House for perusal and reading pleasure of all Yang Berhormat MPs (if they care to read). PETRONAS also makes the annual report available on its website, for those who bother to look. The accounts are duly audited.
The website also contains a lot of useful information, if people really care to find out. Although PETRONAS is not listed on Bursa Malaysia, for all intents and purposes, it could be considered a listed entity as its bonds and financial papers are traded overseas. This requires scrutiny from investors, and from rating agencies such as Standard & Poor and Moody's.
BOYCOTT PETRONAS?
6) The last time I checked, this is still a democratic country, where people are free to spend their money wherever they like.
For those who like to see more of the money that they spend go back to the local economy and benefiting their fellow Malaysians, perhaps they should consider sticking to local products or companies.
For those who like to see that the money they spend go back to foreign shareholders of the foreign companies overseas, they should continue buying foreign products.
FINAL WORD (FOR TODAY)
I'm sorry this is rather long, but I just have to convey it. I hope this would help some of you out there understand something. The oil and gas industry, apart from being very capital intensive, is also very complex and volatile. I'm learning new things almost every single day.
Appreciate if you could help to forward this response to as many contacts as possible to counter the subversive proposal out there.
Thank you.
Tan, Boon Hua
Geoscientist
Peninsular Malaysia Gas Fields Development Project
PETRONAS Carigali Sdn Bhd
Level 17, Tower 2
PETRONAS Twin Towers,
KLCC 50088 Kuala Lumpur
__________________________________________
Tel : +603 - 2331 9307
Fax : +603 - 2331 5633
E-mail : tan_boonhua@petronas.com.my
Showing posts with label Fuel Price. Show all posts
Showing posts with label Fuel Price. Show all posts
Sunday, June 22, 2008
Tuesday, June 10, 2008
Anwar Ibrahim:Talking Cock
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Many governments have to face the unpleasant fallout of the fuel crisis with prices of goods spiralling out of control festering discontent and labour unrest in the country.
In Spain and France thousands of truckers blocked roads over the rising prices of petrol and diesel.In Portugal and Spain long queues formed at supermarkets for fear of shops running out of fresh food due to truckers strike.The story were the same at petrol stations where long lines of motorists were waiting to fill up.In Madrid around 15% of petrol stations were dry a few days ago.
French truck drivers joined the protest and sealed off their side of the border and gridlocked with a go slow that caused 20 miles of tailbacks.In Britain 300 lorries are expected to converge on central London on 2nd July to protest the high price of fuel.There were protests and demonstrations in other parts the world over the high prices of petrol and diesel. Most governments have no choice but to increase prices.
Experts warned that the escalation in price has not ended and may climb to US$200 per barrel if there were no drastic reduction in consumptions.With the exception of OPEC members who can provide cheap fuel to the people, other countries including those highly developed economies, are worried that keeping the price low through subsidies would encourage consumers not to conserve and would lead to wastage and further price escalation and more money flowing to oil-producing countries with serious negative impact on the global economy.Increased consumption and some speculations had been the reasons behind the sharp rise in price.
Was speculation the cause of the unstoppable rise in the price of crude oil? Not so according to Adrians Binks of Argus Media Group, the largest independent energy news and price reporting agency.Binks may be right to certain extent but may not be exactly on the dot.Any commodity with futures market will attract some form of speculation and crude oil has futures for hedging just like many other commodities and would definitely attract some speculators with big appetite for big bucks.
One lucky investor who had, after a lot of research and a lot of thinking, eleven years ago decided that the long decline of oil price in the 1980s was about to end and acted on his conviction.Richard Rainwater of Texas plunked down $300 million of his own money on energy-company stocks and oil and gas futures.At the end of 1998 , the price of oil fell below US$10. per barrel and petrol sold for 90 c per gallon. Rainwater was getting poorer by the day while the Internet and dotcom were making billionaires.Then the dotcom bubble bursted and the price of oil climbed,climbed and climbed.A few weeks ago when the price of oil was at $129. Rainwater liquidated all his energy stocks and netted US$2 billion.He rises from No. 200 on Forbes 400 richest to No.91 with net worth of US$3.5 billion.
In the United States where people are more adapt to changing oil prices and are quick to change their lifestyle, the price of petrol hit the $4.00 per gallon or $0.95 per litre two days ago.Many Americans have abandoned their gas-guzzling SUVs in favour of smaller fuel-saving vehicles.The sales of SUVs and big capacity engine are expected to fall drastically in favour of hybrid and smaller cars.
In UK the price of petrol is around 117.9 p per litre, one of the highest in Europe. To top up a full tank,depending on size of cars, one would require between 100 to 130 pounds.For many Malaysians that's two-month petrol bill.
The most amazing country is Norway, the third largest exporter of crude oil in the world also has one of the highest price of petrol and diesel in the world.Its exports around 3 million barrel of crude oil per day.Since the discovery of oil and gas in the 1960s the country has been saving it oil and gas budget surpluses in a Government Petroleum Fund invested overseas now valued at over US$300 billion which is a whopping RM990 billion at current exchange and is still growing.Conservative estimates predicted the funds may reach US$800-900 billion by 2017.It is a net external creditor and has the second highest per capita in the world at US$53,037. (IMF).A nation once dependent only on its fishing industry and shipping fleet is now the richest nation on earth due to its prudent financial management and a government that stays clear of corruption.
Malaysians who used to be pampered by subsidised petrol and diesel were shocked and angry when the government announced a hefty increase in the prices of petrol and diesel last week. Long queues at petrol stations were seen throughout the nation as motorists rushed to top up their tanks before the midnight dateline.There were huge public outcry accusing the government of Abdullah Badawi as being uncaring and irresponsible.The oppositions political parties and former Prime Minister Mahathir Mohammad were quick to jump on the bandwagon and sent a flurry of attacks on Abdullah. Small and peaceful street protests were seen in the capital city, Kuala Lumpur.
The much touted prime minister in waiting Anwar Ibrahim said the price hike has made the prospect of Pakatan Rakyat taking over the federal government looking much brighter than before and oil price will be reduced as soon as Pakatan took over the government.He also said they will reduce the pump price for petrol even if the price of crude went above US$200 per barrel.
A very brave promise indeed, how is he going to do it and for how long is one big question mark.Is he a man of many words and would have little to offer when the time comes.I dreaded the day Anwar become prime minister and failed in his promises to the Malaysian people in general and Sabahans in particular.Say I am a pessimist but I can't foresee Anwar being able to deliver what he promised the Sabahans. You can't just give Sabah the 20% and ignore the other two states,Sarawak and Trengganu.
With the current price of oil Sabah would become a very rich state if it gets 20% royalty.Let's assume the production from Sabah is around 300,000 barrels per day.At current price of US$130 bbl the total sale a day would be US$39 million and annual gross sale of US$14.23 billion and at 20% on gross sale Sabah would be getting US$2.84 billion in royalties and at current exchange rate it worked out to be RM9.37 billion annually.
Malaysia consumes about 530,000 bbl/day of crude oil.Assuming the volume of petrol and diesel obtained after refining is 60%, its daily consumption is 50.5 million litre a day (see conversion table below).
If Anwar brings the price of petrol and diesel down to its former level of RM 1.92 and RM1.58 per litre respectively and at consumption of 50.5 million litre a day, the Malaysian government would have to fork out subsidy at various level as shown below:
Unit---- Per-------- Per
Sub---- Day --------Annum
sidy---- RM --------RM
--------------------------------
1.00---- 50.5 million 18.4 billion
1.50---- 75.7-------- 27.6
2.00---101.0--------36.8
2.50--- 126.2------- 46.0
3.00----151.5------- 55.3
After the recent price increase the government would still be subsidising about RM1.50 per litre which is around RM27 billion a year.
The consolidated profit of Petronas for the year ended 31 March 2007 was RM46.4 billion and shareholder's fund stood at RM170.9.Where is Anwar going to get his money to subsidise fuel to make fuel thirsty Malaysians happy.
The total Malaysia budget for 2008 was RM176.9 billion.Abdullah expects the budget deficit to narrow down to 3.1 % for the year.With higher energy price there would be some contraction in GDP growth in 2008 where manufacturers have to struggle with higher costs of production due to higher energy costs.
He boldly says he would continue the subsidy even if the price is above US$200 a barrel.A smart man that many Malaysians are very much in love with but who cares not about the nation as long as he stays popular. If the price of oil were to be at US$200 per barrel, it would roughly costs US$1.26 or RM4.10 to buy a litre of crude before adding cost of freight and refining costs.Has Anwar any idea what would be the eventual cost of the refined products.A table below shows the main products and other derivatives that a barrel of oil produces. Anwar promise could just be a pie in the sky.His act of mendacity to the Malaysian people is just abominable.
The lightning increase in the price of crude had taken many governments by surprise where the fundamentals of economic forecasts have gone out of the window leaving government planners flustered and in disarry.
The increases in price of petrol and diesel(2004-2008) in Malaysia is shown in the table below:
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There were gradual increase between May 2004 and February 2006. The drastic increase between Feb 2006 and June 2008 was probably due to the sharp increase in the price of crude during the same period.
Between Feb 2006 to Oct 2006 the price of crude was fluctuating between US$54-68, breached the US$100 in April 2008 and climbed to over US$130 in May/June 2008.The government should have done one adjustment between Feb and Oct 2006 and a second adjustment in June this year.
Anwar wanted his Pakatan Rakyat to take over the federal government, if possible, through the back door.
Take a look at his Pakatan Rakyat in Selangor and Penang.They seemed more interested in witch hunting than getting down to serious work to administer the states.They delighted in digging into the sins of the previous administration rather than leaving it to discover in the course of doing their duty.
Facts and figures about crude oil:
1 barrel of crude = 42 U.S.gallon = 34.9 Imperial gallon = 158.9 litre
The table below shows what a typical barrel
of crude produces:
Product | Percent of Total |
---|---|
Finished Motor Gasoline | 51.4% |
Distillate Fuel Oil | 15.3% |
Jet Fuel | 12.3% |
Still Gas | 5.4% |
Marketable Coke | 5.0% |
Residual Fuel Oil | 3.3% |
Liquefied Refinery Gas | 2.8% |
Asphalt and Road Oil | 1.7% |
Other Refined Products | 1.5% |
Lubricants | 0.9% |
Bringing the price of petrol and diesel down would certainly endear the people to him but what price the nation would have to pay to make the people happy, Anwar popular and the nation broke.
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.
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](https://www.cia.gov/library/publications/the-world-factbook/maps/bx-map.gif)
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