Up up and away

I was amazed at the long queues of cars radiating from every petrol station that I passed by this evening. Obviously the drivers were rushing to fill up their tanks while the petrol price still remained at RM1.92 per litre. In true Malaysian fashion, the news/rumours of the price increase of petrol was spread via email and sms since early afternoon. It later transpired that the PM had made an announcement in the evening that the petrol price would increase to RM2.70 at midnight. That's a 40% jump.

What I don't understand is why people would go through all the hassle just to save a few bucks. I mean, it looked like some of those drivers would have to wait at least half an hour before they could even enter the petrol station. My tank was 90% full so I didn't bother to top up the last 10% just to save a few Ringgit.

I figured that even if I filled up a tankful of petrol, I would save about RM30, and just for this one time only. From tomorrow onwards every full tank of petrol would cost me at least RM100. It would be a slightly different story if I were a truck driver with a 200 litre tank. But still, I would save only this one time.

I really don't mind paying market prices for petrol. Let it be RM4.00 per litre. If it's market price, it could go up, and it could go down. What I have a problem with is paying an artificially inflated price for my car, just because the entire auto industry in Malaysia is subsidizing Proton. I don't have any personal vendetta against Proton but I do have objections to our gomen's policies.

In Thailand the petrol is more expensive, but the cars are relatively cheaper. That means that consumers have a real choice of vehicle ownership and usage. It's good, because people can afford to buy a car and not feel bad if they don't use it everyday. Lower cost of ownership, higher cost of operation. That's OK, because then it encourages the use of public transport during weekday commuter rush hours, but still leaves the car owner the choice to drive during off-peak hours.

In Malaysia cars are ridiculously expensive, and public transport is inadequate, so the car owner feels compelled to maximize the utility of their car. In the past, the subsidized petrol offset the high price of car ownership. High cost of ownership, low cost of operation. But now with the fuel subsidies being gradually lifted, we are hit on both sides. High cost of ownership, and high cost of operation. It sucks. Here I am paying RM80,000 for a Toyota Vios when it should only cost RM60,000. And now the petrol price is going up to match market rates. On top of that, the public transport is still unsatisfactory.

My bottomline is: If the government wants to remove the petrol subsidies, it should also remove the Proton and local auto industry subsidies. If the government wants to help the lower income group, it should tax the expensive cars and subsidize the public transport, motorbikes and small cars regardless of the make or model, i.e. not only Proton.

I blame Dr Mahathir for much of this mess. Firstly, his grandiose vision of industrialization has led us up this dead end road called Proton. Secondly, his handpicked successor seems to be unable or unwilling to tackle the root problems of the economy. And don't forget that it was under Dr M and Dr Ling Liong Sik that KL's Light Rail Transit system was established -- a system consisting of three different companies operating totally different and mutually incompatible hardware, separate ticketing and train stations that do not integrate. So you can see now why we're stuck, since these disparate LRT systems are literally cast in concrete.

The Malaysian economy is riddled with systemic inefficiencies. Many of these stem from abuses and misuses of the NEP. Which means that overcoming our handicaps will be doubly or triply difficult. Not impossible, just more difficult. Don't we all love challenges? We also take heart in the fact that there is no perfect economic system on Earth, since we humans are inherently imperfect. Since I am part of the problem, I should then be part of the solution. Forget about saving a few Ringgit worth of petrol tonight. Look at the bigger picture.