Found this interesting story from comments posted on Malaysia Today and would like to share with all of you.

The story about “subsidy”…

A man called Maha owns a farm which can produce 10 apples every day.
He has 5 workers to operate the farm.
Each of them eats 1 apple daily and it is enough to keep them operating the farm normally.
The remaining 4 apples, the landlord sells them at RM10 each and he earns RM40.
He uses the RM25 to improve the farm operation and facilities.
He gives RM2.00 to each of his workers and he keeps the remaining RM5.00 as profit.
Day by day, the farm is well developed and all of the 5 workers are happy with the money they can save.

When Maha passed away and there is a new landlord, Abdul comes to continue the farm operation.
He says to the workers:” We need to improve the farm quality and redefine our way of thinking.
From now on all of you only need to pay RM1.00 for each apple you eat.
It is very cheap as the price is RM10 each outside the farm.”
The workers have no choice but to pay RM1.00 for the apple they eat daily.
Their earning decrease from RM2.00 to RM1.00 per person.
As usual, Abdul sells the 4 apples and he gets RM40.
He uses RM25 for farm improvement and pays RM10 to his 5 workers.
He gets RM5.00 as profit. On top of that, he gets another RM5.00 from the apples that he sells to his workers.
In total, he gets RM10 as profit every day.

Soon, the apple price increases to RM20 each.
The new landlord gets a higher profit as he gets RM80 for the 4 apples he sells daily.
Then, he decides to give the farming improvement contract to one of his close friend, Samy.
Samy says:”Apple cost naik, improvement cost also misti naik.”
So, the farm improvement cost increases from RM25 to RM50.
In actual, the improvement only cost RM30.
The remaining RM20, Abdul and Samy share evenly among themselves.

Let’s calculate how much Abdul gets daily:

RM10 (from farm improvement cost)
RM20 (Net profit by selling 4 apples: [Gross profit, RM80] – [Improvement cost, RM50] – [Wages RM10] = RM20)
RM5 (from selling apples to his workers)

In total, Abdul gets RM35 daily compare to RM10 initially when he takes over the farm from Maha.
His profit increases RM25 and the workers are still getting RM1.00 daily per person.
The greedy Abdul does not want to stop there.
One day, he says to his fellow workers:” You see ah, the current market price for one apple is RM20 and you are only paying RM1.
See how lucky you are! I have to SUBSIDY RM19.00 for each of the apple you buy and total I need to SUBSIDY RM95.00.
This will greatly burden the farm and we might get bankrupt if we continue like this.
In order to avoid bankruptcy, I need to increase the apple price that you buy from RM1.00 to RM1.50 and I will bear the remaining RM18.50 per apple as my subsidy to you all. ”
So, greedy Abdul adds RM2.50 to his current profit and the number becomes RM37.50.

After you have read the story, I am sure you have already understood the meaning of “SUBSIDY” given by the government.

The RM95 subsidy never existed in the first place and so was the RM52 billion fuel subsidy generously “given” by the government

Cutting fuel subsidy is actually just a reason to steal money from your pocket.
Are you gonna stand there and let them rob you?

Car Duty vs Fuel Subsidy, Where Had The Car Duty Gone To?

Recent fuel hike had sparked anger across the country asking Petronas account to be made available for public scrutiny to justify why the government cannot continue to subsidy the fuel. May be all these while, Petronas may not be footing 100% of the fuel bill, is the car owners had paid in advance for fuel subsidy in form of import and excise duties for both local and foreign mad vehicles, as suggested by one article published in the Star recently, and republished by Malaysia Today.

Following up on this topic, I had done a little research myself, and may be others had already done it but did not get highlighted in a wider angle. I had visited the website of Malaysia Automotive Association to get the statistic of total vehicle sale from 1986 till 2007, to get a broad idea of estimated excise and import duties might have been collected by the government since the inception of Proton, as the import duties were imposed for the excuse of protecting our new start up that suppose to make our nation pride in years to come. Well, Proton is not an issue for our discussion here, so we will not talk about it’s success or failure and the failure cost to the rakyat. Let’s us guestimate how much we had contributed to the government coffers since 1986.

Total vehicle sales since 1986 amounted to 6,264,910 units, both passengers and commercial vehicles included. (Source: http://www.maa.org.my/info_summary.htm). Assuming the ratio of 60% of total vehicles being locally produced, and rest of them are being imported. Also assuming average duty collected from local car is RM 10K each, and RM 50K for imported vehicles. Please note that I had made broad assumption, as the actual figure was never reported by the government in their annual budget and accounts.

An estimated of RM 162 billions had been collected over the past 22 years. Actual figures could be much higher as import tax was relatively high in the 90s before we signed the ASEAN free trade agreement. Where had the money gone? How much fuel subsidy had been given by the government on fuel after being offset by the car duties?

Such amount can be used to build a comprehensive rail network comparable to Japan and Europe, where almost all major cities are connected by rails. An efficient metro networks can also be build in Klang Valley comparable to London, Hong Kong and Singapore.

I hope the MP will continue to ask for actual figures in the Parliament and show to the rakyat that the car duty and Petronas proceed had been used in an accountable way.