Fuel Price Hike Effects – RM625 Rebate Not Helping

When the Government increased the pump prices by 40.6% in June, they quickly announced that all is not lost for the lower income group by giving vehicle owners of 2000 cc and below a rebate of RM625 to assist them in cushioning anticipated adverse effects.

People queued at the POS Malaysia for the rebates and millions were dished out.  Guess what happened next?

Money received was spent quickly and everything we buy started going up.  We still need to pay the 40.6% increase because the rebate was easy come, easy go.  What did the RM625 do to the people who received it?  None whatsoever.  And we all get to suffer the price hike effects in almost every area of life.  I’d say that the full impact will be seen by end of this year and more areas that we never thought would be affected will crop up month after month here onwards.

The recent DEBAT KHAS between Ahmad Shabery Cheek and Anwar Ibrahim was supposed to shed more light on the fuel price hike issue.  Anwar clearly delivered his message that increasing price by 50 sen LESS would have soften the inflation blow and how he believes the money for supporting the decrease will come from.  On the other hand, Shabery Cheek completely forgot why he was there and never did justice to the Government’s defense on why quantum of the fuel hike was necessary and how the public can expect the Government to act on cushioning the effects.  Clearly, there was nothing the Government is doing or will be doing but reacting as each fuel hike impacts hit the various industries in an ad hoc manner.

There were many speculations and analysis on how the price hike is not justified being a net oil producing country.  I recently came across a very interesting analysis by Senseless Killer, a fellow blogger, which I will highlight here.  All that’s said about Malaysia by the Government is a disinformation on the realities about our fuel capabilities.

RM 2.70!!! Individual perspective:

As of last month a Toyota Vios would ’cause a damage’ of about RM 89,000.
In the international market, a Toyota Vios is about USD 19,000
USD 19,000 = RM 62,700 (using the indicative rates of USD 1 = RM 3.30)
That makes Malaysian Vios owners pay an extra RM 26,300.

This RM 26,300 should be cost of operations, profit and tax because the transportation costs have been factored in to the USD 19,000.

RM 26,300/ RM625 petrol rebate per year translates to a Vios being used for 42.08 years.

I do understand that the RM 625 is a rebate given by the government, but it also means that one has to use the Vios for 42.08 years just to make back the amount paid in taxes for the usage of a foreign car. Would anyone use any kind of car for that long?

Now with these numbers in front of us, does the subsidy sound like a subsidy or does it sound like a penalty? This just seems to be a heavy increment in our daily cost of living as we are not only charged with high car taxes but also with a drastic increase in fuel price.

Read here for the full analysis.

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