Friday, June 06, 2008

PROTES needs to re-define its demand

According to the dictionary, subsidy is a grant, usually of money, especially governmental, to aid private undertakings or to promote commercial enterprise.

Subsidies are granted to promote national interest, as in agricultural subsidy that’s practised by the Americans and Europeans to ensure their farm products are not crushed into oblivion by those from the more productive and thus more competitive farming countries like Australia.

Government subsidy may also be given to arms manufacturers during a war, for 'bloody' obvious reasons.

Social welfare packages would be a form of subsidy of national interests, to ensure the financially-economically disadvantaged aren’t left behind and would be entitled to a slice of the national standards of living.

Thus, to justify a subsidy, there must be firstly, a national interest content, where the investment brings home a net benefit, and secondly, a means to ensure the subsidy reaches its proposed targets, whether these be the farmers, fishermen, single parents or the economically disadvantaged in society, and not open to abuse or pilfering.

The fuel subsidy in our country achieves neither.

It’s not in our national interest to subsidize fuel to the tune of RM 54 billion annually. Just because our nation produces oil doesn’t mean we should have cheap fuel to burn away without some returns, when the better outcome would be to translate the oil earnings into something useful and more lasting for our country, like vital infrastructure such as a good public transport system, and improved water, electrical and sewerage facilities.

Building world class education facilities from primary to tertiary level would also merit subsidization because the investment would bring a net gain of knowledge and improved productivity for the nation.

Secondly, the subsidy has been abused by those who do not merit the taxpayers’ sacrifice. When a subsidized system like that for fuel creates a two-tier system, we can bet there will be corrupt siphoning of benefits across the tier, where those not entitled will enjoy benefits at taxpayers expenses.

Just as a small example (and mind you, this isn’t the principal cause of the ‘siphoning’), petrol sales to foreigners near border regions have allowed those foreigners to enjoy around RM 1 billion worth of subsidy at Malaysian taxpayers expense.

Removing the fuel subsidy does NOT mean the end of subsidy to those in need as there are other ways to ensure they receive the publicly funded benefits via, for example, social welfare packages which will be an improved system of ensuring the benefits actually reach the intended target population.

Therefore the fuel protest planned by PROTES, the Organisers Coalition Against Inflation, as reported by Malaysiakini in Mass anti-fuel hike rally on July 12, should be about the new and hopefully more effective form of subsidy to the rakyat, rather than demanding the restoration of old fuel prices.

PROTES hopes to rekindle the Bersih rally but this time with 100,000 people participating.

Unfortunately, as I fear, it’s aim is so predictably narrow, basically to call on the government to reduce fuel prices to its original levels before the most recent hike.

Dr Hatta Ramli, the PROTES coordinator for the planned rally argued the same old tired inflexible story that because Malaysia is an oil producing country and has record profits, the government should use the profit to relieve the public from being burdened by the fuel hike.

He asserted: “We have five weeks to mobilise the crowd and the government has five weeks to react to the people’s demands (to revert fuel prices to their original levels).”

I would have supported his call for the government to 'use the profit to relieve the public from being burdened by the fuel hike', except that his proposal has specifically prescribed the regrettable profligate reduction of oil price.

What a shame that while his social objective (“…use the profit to relieve the public from being burdened by the fuel hike …”) is correct, his insisted avenue (“…to revert fuel prices to their original levels …”) is wrong, wasteful, conducive to abuses and lacks strategic national interest.

I am not sure whether his title of 'doctor' would be that for a medical general practitioner, and if it is, it may explain his 'prescriptive' demands. The problem with being 'prescriptive' is that you cut out other forms of remedy.

One doesn’t and shouldn't spend every damn thing in our kitty to live day by day just because we have money in it. That’s financially imprudent and lacks strategic investing for the future.

Let me provide an example – Chinese parents save and skimp and even mortgage their homes in order to be able to send their children to universities, usually abroad as they may find it difficult to get a place in our local tertiary institutes. Now that’s strategic investing, in their children's education for a better future.

I just mentioned "The problem with being 'prescriptive' is that you cut out other forms of remedy", so who knows, maybe that's the way Dr Hatta Ramli intends for it to be, with his real objective being simply to char koay teow*.

* a Malaysian term meaning to stir fry a hot political issue for political opportunism, rather than to solve the problem

I hope the DAP, which has often voiced its objection to fuel subsidization, will stay true to its declared policies and remain aloof from the PROTES drive to reinstitute the non-sustainable fuel subsidy.

But I will support any campaign (by Dr Hatta or anyone) to ensure those who cannot afford the new fuel price receive subsidies in other forms that won’t be open to abuse by those not entitled to them.

And similarly I will support any other campaign that attacks the wanton profligacy of the BN ministerial junkets, like the one reported by Cheras (DAP) MP Tan Kok Wai to Malaysiakini in Oil hike protests in KL, Ipoh, Kuching, about Zulhasnan Rafique, the FT Minister, and his underlings Abdul Hakim Borhan, KL mayor, and approximately 15 officers for going on an expensive trip to Berlin, London and Vancouver, just to study, beat this, ‘administrative matters’.

If these people really want to learn ‘administrative matters’, they should just go down to Singapore where the Island nation's city administration is second to none in the world.

As Tan remarked: “How can you tell the people to change their lifestyle when the wasteful lifestyle of the government is not changed?"

I don’t oppose AAB’s move to reduce and eventually remove all fuel subsidy, but I deplore his ministers and senior civil servants for putting their snouts into the public trough when it’s a time for belt tightening across the nation.


  1. To most poor people, "change your lifestyle" simply means making do with less food or meals. "Tightening your belts" means that your undernourished body can no longer support your waist and hence your trousers are dropping down.

  2. First of all the RM 54 Billion subsidy figure which is being parroted around sounds like another "Funny" statistics which the regime is so fond of.

    I'm angry with the government, not because of the fuel subsidy removal per se, which is unavoidable, I'm angry because this government itself does not know the meaning of "sacrifice" which is what they are asking common folks to do. Multi-million , nay, multi-billion ringgit crony enrichment schemes are still going full blast.
    Corridors here, Corridors there, toll going up as planned, UMNOnaut No. 2 still going up to space, Monsoon Cup, IPPs (owned by cronies, of course) still get their guaranteed low cost fuel and guaranteed profits. Ah, yes , the PM's ultimate fuel guzzling A319 jet

    Even the Federal government's feeble efforts at tinkering with public transport are essentially crony giveaway schemes. Just go check who is behind RapidKL

    I'm afraid this latest episode is going to widen the gap between rich and poor, already very bad in Malaysia.

    I won't try to pretend I'm personally badly affected by this price hike. Frankly I'm one of the "haves", I spend maybe 2% of my monthly income on petrol. So what if that increases to 3% ? But for a low wage earner, who already barely makes ends meet every month, this episode is going to be an unmitigated disaster.

  3. Of course, disinterest in or principled opposition to any form of subsidy can also be taken to an extreme.

    Marie Antoinette - "Let Them Eat Cake"

  4. Hey, I'm going to London and Brussels in a few weeks. How can I study administrative matters?

  5. "I hope the DAP, which has often voiced its objection to fuel subsidization, will stay true to its declared policies and remain aloof from the PROTES drive to reinstitute the non-sustainable fuel subsidy."

    Note that DAP remained aloof to HINDRAF. I don't think it's likely that they will embrace PROTES on this instance. But the problem is, PKR and PAS may embrace PROTES, and if so they will do so under the banner of PR, thus implicating DAP as well.

  6. Even Supremo Kit Siang is calling for a protest on his website. The rise in gas prices will affect the poor, working & middle class the most in the form of higher transport costs & higher food prices. Already a plate of chicken rice near Central Market has gone up to RM4.

    As for the rich, they'll just complain about how much it costs to fill up a tank of a Merc for the next week or so... but the increase will hardly affect them considering the amount of wealth they have.

    The question is will we see the "savings" from slashing the fuel subsidy go towards developments & new policies like:

    - a better municipal transport system?
    - a better railroad system?
    - lower toll charges?
    - abolishment of import taxes for motor vehicles?
    - a better public healthcare system?
    - a better education system?
    - etc etc etc?

    Looking at the gov's track record, I'm skeptical that they'd put the savings to good use. It gonna be used for useless pork-barrel projects, and meanwhile... tolls get more expensive, food gets pricier, and people find it harder to survive.

  7. brighteyes, I agree with your proposed items to be subsidized with the savings from the removed fuel subsidy, with one exception, that of removing the import tax for motor vhicles. How does this help the poorer group of rakyat?

    But I believe your proposal (save for above discussed item) is the right way to go instead of demanding the old highly-subsidized fuel price (just wait for my new post - it'll shock you even more).

    As for the chicken rice going up to RM4, what was the cost before? We need to work out whether there's opportunistic gouging. But yes, food price will definitely rise, and we will see what the government will be doing to relieve the people's difficulties.