Government Is Subsidising RM8.00 Per Liter of RON95. Sampai Bila?

 

SRI LANKA + MALAYSIA — Are there any similarities? 

1st both governments are bloated - 1.5m Civil Servants in Sri Lanka and 1.7m in Malaysia (with a population of 22m and 33m respectively). 

(OSTB: Well in Malaysia you must add another 1.3 million workers in the GLCs. This means over 3.0 million people depend on the government for their survival).

2nd to remain popular and to buy votes, both governments heavily subsidize daily necessities like cooking oil, sugar, petrol etc etc. to the detriment of the national budget. 

Malaysia’s gov’t debt is (more than RM1.4 trillion). Arent we religiously following Sri Lanka? Is the dropping value of the Ringgit a signal to us? PM Ismail Sabri Yaakob, please wake up and take charge before it reaches a point of no return.

(OSTB : Well the PM Ismail Sabri is like a temporary teacher. It is not a permanent job for him. By the way things are going, Ma'el will just be a blur soon.

Talking about subsidies, in Singapore a litre of 95-octane petrol is between S$3.16 - S$3.25 (RM10.07 to RM10.36).  

In Malaysia a liter of RON95 petrol is RM2.05. 

The price of petrol in Singapore is FIVE TIMES the price of petrol in Malaysia. More importantly the price of petrol in Singapore reflects real market prices. This means someone in Malaysia is subsidising the price of petrol FIVE TIMES the world market price.

That someone is the Government. The Government is burning through billions of Ringgit just keeping the petrol prices at RM2.05 per liter when the real world market prices are FIVE TIMES this price.

Bear this in mind : for every RM2.05 you are paying for a liter of RON95, the Government has subsidised over RM8.00 !! 

Even if the Government "allows" petrol prices to increase by 10 sen per liter people will scream, especially Malay people. If the Government allows petrol prices to increase by ONE Ringgit per liter, there might be protests and demonstrations. 

Imagine if the Malaysian Government removes all petrol subsidies and allows the petrol price to reach full market prices, something like Singapore ie RM10.36 per liter. There will be a Sri Lanka in Malaysia.

Few analysts or even the Government are paying attention to this huge hole in the Government's pocket - the price of RON95 is being heavily subsidised to keep it at RM2.05 per liter when the real world market price for petrol is actually over RM10.00 per liter.

Soalan cepu mas : How will this affect the Government's revenues from oil this year? How will this affect both dividends as well as corporate tax payments by our national oil company?

How long can the Government of Malaysia afford to subsidise over RM8.00 per liter of RON95? 

If I may speak Chinese "the Government is going to die". Sei lor !!

An interesting autopsy of how Sri Lanka became bankrupt !

Of its 22 million population, it has 1.5 million government servants. Almost everything is subsidized by government and lots of free handouts.

The people became pampered and not productive enough until the government did not have enough revenues and taxes to pay for all the subsidies and freebies!

Sri Lanka ought to be a well off country, a beautiful place and well-educated population.

What happened ?

Read the write-up by the Governor of Central Bank Sri Lanka himself !!!

All these years the politicians were making themselves popular to the voters to stay in power by giving more subsidies and giveaways and the people became less competitive, less productive and less self-reliant.

It's like parents spoiling their kids! Sad ending.

Why did SriLanka run out of dollars? Why do we have huge rupee and dollar debt ? Why did we continuously borrow? Even after the default, why are we going after lenders and begging for more loans ?

Because we are a nation of consumers, not a nation of producers! We are a population of 22 million consuming more than we are generating (or producing). Obviously, if you spend more than you earn, you end up borrowing!

Our politicians, for decades, made us slaves to subsidies. Fuel subsidies, fertilizer subsidies, free houses, subsidized water and electricity, free education, free healthcare, free cash etc etc. These politicians did not do this because they love you and me, they did it just to buy our votes and to make us their slaves! 

That’s the culture we need to change now. Out of the total debts of ours, yes, politicians may have busted max 10%, but the balance 90% was busted by all of us as a nation by consuming subsidised goods and services for 30+ years!

Do you know that, if we had not subsidized fuel and fertilizer for the last 25 years, our foreign debts would have been less than half of what it is today? Do you know that this country has 1,500,000 government servants, 800,000 three wheelers, 200,000 boutique shops and 50,000 salons, spas, cosmetic and photo shooting centers ? 

If you are a person traveling abroad regularly, have you ever met a Sri Lankan taxi driver abroad ? A Sri Lankan spa attendant, Sri Lankan Mobile or boutique vendor ? Never! Why is that?

Unlike in India, Pakistan, Bangladesh, Philippines, Indonesia, Thailand etc., in Sri Lanka, people can live a normal life without starving, even if you don’t do a productive job, because almost every basic need here is free or subsidized! 

If you are fed, why hunt? This is the culture our political vultures gifted us. We should not only chase away those vultures, but must change that culture and society also! If we expect only to chase those vultures away, but after that come back, relax and live in the same unproductive, subsidized, mediocre society, then this change we are asking for has no meaning whatsoever.

Let’s not subsidize anything except health and education. 

Let everyone pay the right price for what they consume, if they need to consume. Poverty is something that shall be defeated, not something to be embraced ! Our political culture encouraged us to embrace poverty and never to defeat poverty. They gave us free/discounted things, and we got addicted to that. 

They bred a generation of unproductive individuals, consumers, to be slaves of a subsidized society. What we are going through today is a direct result of that.

No friendly country or lending institution shall lend money to Sri Lanka to re-implement or maintain this unproductive, subsidized society. Because if they do, these lenders will also not get their money back and the country will declare bankruptcy again in a few more years! 

Lenders including IMF must insist that no imported goods, including fertilizer and fuel, shall ever be subsidized. They must insist that the dolling out of money by way of various other subsidy schemes be stopped. 

They must insist that retirement age of all government employees must be at 60 years and not 65! 

Lenders must demand that loss making government business ventures be shut down or privatized. 

Don’t lend us to defend our currency artificially. If our currency has no value, let it be 4000 rupees per dollar, not 400! Please, please, please! Don’t lend us a penny to be wasted. If you lend us to waste, you are not a friend, you are an enemy! You are not managing our problem. You are worsening it!

This economic collapse is the best thing that happened during our lifetimes! We need to wake up, not only to chase these political vultures away, but also to change ourselves, our attitudes, and our society. There will never be a chance like this again.

*Notice the similarities with boleh land?* Malaysians need to wake up!!! 

The views expressed are those of the writer and do not necessarily reflect those of MMKtT.