/// k1980 Says:
How can Malaysia, a net oil exporter, be compared to oil importers? Why are other oil exporters not included in the list? ///

k1980, walao and AWhite,

First off, I didn’t come up with the list – Reuters did. The US and the UK are also oil producers.

The key issue here is really – does Malaysia want to continue to be dependent on subsidies? Yes, the cost of petroleum in Malaysia is low because it it oozing from the ground and the sea. But do you want to sell something cheaply below market rate, just because you get it cheap? The US and the UK are oil producing countries, but they don’t sell gasoline at cost price.

The real issue facing Malaysia is that it is fast running out of oil (can’t remember off hand – but is the oil reserves running out in the year 2012?). So, do you want to wait until 2012 or 2013 to see petrol price tripling or quadrupling then, instead of a hike of 40.6% now and adjust to market rate eventually?

Someone mentioned Brunei. I think their reserve will last longer. Even the reserves in the UAE/Dubai are running out soon. But they were smart – they realised that long ago, and have spent the past decade building up their infrastructure, building up their tourism industry and buying up world-class companies with their oil money instead of splurging it away on white-elephant projects and sending a civilian on a space joy ride.

Why is Malaysia in this petrolem mess? To me, the answer is clear — Proton and the ill-fated car industry. Malaysia never had and never will have any comparative, let alone competitive advantages in the car industry, and yet because of one man’s ego and misplaced and misguided nationalism and sense of industrialisation, Malaysia plunged head-long into a non-viable industry. The rest, as you can see, is history.

Because of the Proton, there is a need to make it appear “successful”. Car prices for local cars were/are artificially kept very low to encourage ownership and sales of local-made cars. What this means is that many can now own car when, economically and financially, they would otherwise not be able to. In other words, a false demand was created.

To make matter worse, petrol prices were heavily subsizied to stimulate car usage and car sales. Again, a false and articially high demand for petrol was created.

So, who is to be blame for this petrol fiasco?

If there is one thing that the Malaysian government gets it right for the past 5 decades, it is this removal of petrol subsidy. If there is one far-sighted policy that the Malaysian government can boast of in the past 5 decades, it is this scaling down of subsidies. (What, you want to wait until the oil wells run dry in 2012 before you act?). Hence, I sigh when I see the present administration being attacked relentlessly for something which is the right thing to do. If someone is to be blamed, it should be the champion of Proton. It should be He who introduced the subsidy. It is he would is the master of the crutch mentality.

As I said before, we are all barking down the wrong oil wells. It will be running dry soon. Do you want to shed tears only when you see the coffin?

Do we now know who is the real culprit, who is to be blamed?

* * *

Based on the 12 countries I quoted, only 5 are rich first-world countries. The rest are much poorer than Malaysia. Based on CIA World Factbook, their GDP per capita on a PPP basis (that takes care of the purchasing power parity) are appended in the last column.

Just look at the Sri Lankans. Their average income is not even one third of Malaysians, but they are paying almost double the price for petrol. Malaysia’s problem is that its people have been enjoying cheap petrol for so long that they become addicted to it.

London……..$2.15
Singapore….$1.58
Tokyo………$1.50
Sri Lanka…..$1.46……….$4,000
Sydney…….$1.39
Delhi………..$1.19……….$2,700
USA…………$1.00
Bangladesh…$0.97……….$1,400
Vietnam…….$0.90……….$2,600
Malaysia…….$0.83……..$14,000
Indonesia……$0.65………$3,400
Beijing……….$0.61………$5,300

Source: Reuters

/// rainbowseahorse Says:
Today at 13: 02.41 (1 hour ago)
WrathOfGrapes, first and foremost, Sri Lanka is not an oil exporting country like Malaysia and so no comparison. Malaysian GDP USD14,000 per capital??? Only a nut would believe that figure! It’s more like USD2,200. ///

rainbowseahorse – please read my entry in its entirety – then maybe you can see where I am coming from. The US and the UK are oil producing countries as well. Malaysian per capita GDP is not US$14,000 but higher at US$14,400 – sorry my mistake. It is on a PPP basis – go and find out the meaning of purchasing power parity – it is very important concept. Otherwise we cannot discuss how many ringgits you need to buy a McDonald hamburger.