Against Petrol and Diesel Price Hike 2008

Yang Amat Berhormat Perdana Menteri
c/o. Sarawak Federal Secretary
Office of Federal Secretary, Sarawak
Tingkat 17, Bangunan Sultan Iskandar,
Jalan Simpang Tiga,
93300 Kuching, Sarawak

Yang Amat Berhormat,

Re: Protest Against the 4th June 2008 fuel price hike:
· Petrol price increased by 78 sen/l and
· Diesel price increased by RM1.00/l

We, Democratic Action Party, Kuching, strongly oppose to the fuel price hike announced by the Government on 4th June, 2008. By the announcement, the petrol price was increased by 78 sen to RM2.69 per litre (in Sarawak) while diesel price was increased by RM1.00 to RM2.58 per litre (in Sarawak).

The reasons for our strong objection to the domestic fuel price increase are as follows:

1. This is by far the largest single fuel price increment in the history of Malaysia, 40% increase in petrol price and 63% increase in diesel price. The People find it extremely difficult to adjust to such a sudden and huge increase in fuel prices and the ensuing inflation resulting from such hike.

2. Petrol and diesel are derived from crude oil, our country’s most valued natural resources. The People are the owners of our country and thus its natural resources. The Government is merely the management body elected by the People to manage our country. Oil belongs to the People and the profit earned from the production and sale of crude oil ought to be utilized for the benefits of the People, one of which is affordable petrol and diesel.

3. The Government claims that the petrol and diesel sold in petrol stations are subsidized by the Government and that car owners have been enjoying too much “subsidy” on petrol and diesel. This is the biggest FALLACY.

When one purchases a car, he has to pay the Government heavy import tariffs. For example, a Toyota Vios in Thailand is only sold at approximately RM50,000.00 but it is sold at RM75,000.00 in Malaysia. Even with an average high petrol consumption of RM500.00 per month, this RM25,000.00 tariff paid to the Government is equivalent to free petrol for 8 years and 4 months.

In general, import tariff imposed by the Government increases the price of cars in Malaysia by 50% of its original prices. Therefore, when one purchases a car, he has already paid in advance the so-called “petrol subsidy” and more.

In addition, purchasers of imported cars have to pay the AP holders an average RM30,000.00 per car.

Therefore, instead of what the Government claims about subsidizing the People on petrol and diesel, car owners are actually subsidising the Government and the AP-holders.

4. Even if one were to purchase a Proton car, he has to pay for the additional “Cost of Inefficiency” brought about by protectionism in the national automobile policy.

With the AP system and high tariff imposed on foreign cars, Proton can inflate its prices above the competitive prices. It enjoys the comfort zone provided under the national automobile policy, as a result of which, it continues to be inefficient after 20 years.

The majority of the Proton car owners are not getting their value for money. They have been exploited since the inception of Proton.

Without protectionism policy, we can get much better quality cars of the same engine capacity as a Proton car, but at a lower price. A better quality car entails cheaper maintenance costs and less fuel consumption.

5. We are a net oil exporting country. Our country actually benefits from the increase in international Crude Oil Prices (COP). Compared with other oil-exporting countries, our domestic petrol and diesel prices are by far the highest. The following are some of the petrol prices in these oil-exporting countries:
Price of Petrol in Oil-exporting Countries (per litre)
· UEA --- RM1.19
· Egypt --- RM1.03
· Bahrain --- RM0.87
· Qatar --- RM0.68
· Kuwait --- RM0.67
· Saudi Arabia --- RM0.38
· Iran --- RM0.35
· Nigeria --- RM0.32
· Turkmenistan --- RM0.25
· Venezuela --- RM0.16
· Brunei --- RM1.26

The Government should compare our petrol and diesel prices with these oil-exporting countries and not pride itself for having cheaper petrol prices than the oil-importing countries.

6. For years, the Government has been encouraging the People to buy cars so that our national car, Proton, can survive despite its inferior quality.

To encourage the People to buy cars, Bank Negara lengthens the period of repayment under the Hire-purchase Agreement for buying cars from 5 years to 9 years. By implementing such policy, the Government is actually using the People’s future income (from 5 years of future income to 9 years of future income) to support the present car industry.

As a result, large number of youngsters and middle-aged group found themselves tied down with the car-loan repayment obligation for 7 – 9 years.

It is most unfair on the part of the Government to now suddenly increase the petrol and diesel prices by such huge margin and turn around to tell these car owners to change their life-style and stop using private cars.

These car owners have bound themselves to the repayment of car-loans for the next 7 – 9 years. How are they going to make the adjustment to the sudden increase in the petrol prices and the ensuing inflation?

7. Despite the so-called “subsidy”, the Government’s net income from production of oil after deducting the so-called “subsidy” on petrol and diesel is on the increase.
These figures were obtained by the Member of Parliament for Bandar Kuching in Parliament. Over these 4 years, international COP rose continuously. These figures show that increase in international COP actually increases the Government’s income.

This is further confirmed by the statement of the former Second Finance Minister Tan Sri Nor Mhamad Yacop on 2-11-2007 that:
“ the country gained about RM250 million for every US$1 increase in the price of crude oil and that amount was after paying subsidies to maintain the price of energy in the country.”

It cannot be over-emphasised that the RM250-million gain to our country is after paying the subsidy to keep the price of fuel unchanged.

Therefore increase in international COP cannot be a reason to justify the Government’s decision to increase our petrol and diesel prices.

8. Petronas’ profit has been increasing over the last few years and it is mainly attributable to the increase in the international COP.
It is estimated that given the continuous increase in international COP, Petronas’ revenue for the financial year ended on 31-3-2008 is likely to be more than RM200 billion. Again, the figure shows that the higher the international COP, the higher Petronas’ profit will be, and in turn the higher the Government’s income from oil will be.

Furthermore, Petronas is a government-linked company (GLC) charged with the production, sale and management of our country’s richest natural resources, the oil. It derives its wealth from the production, sale and management of our country’s oil. There is no justification why it should be allowed to retain the large Net Profit while the People are suffering.

There ought to be cash payment to the People to help shoulder the escalating costs of living. It is proposed by our Party (Democratic Action Party) that a more equitable distribution of our country’s riches is:
(a) For an individual whose income is less than RM3,000.00 per month, the oil profit be utilized to pay that individual a cash sum of RM3,000.00 per year; and
(b) For a household whose total income is less than RM6,000.00 per month, the oil profit be utilized to pay that household a cash sum of RM6,000.00 per year.

9. While the Government is asking the People to change their lifestyle and use more public transport, in Sarawak, the public transport system is so poorly managed that it is practically non-existent. One can hardly get around Kuching conveniently without a private car.

Before the government decides to increase the fuel prices and urge the People to use public transport system, the Government ought to have in place an efficient public transport system which has the following characteristics:
· Punctual
· Regular
· Comfortable
· Wide coverage
· Cheap

Sarawak is the largest oil-producing State in Malaysia and has contributed tremendously to the national coffer. However, it is sad that despite our riches in natural resources and our contribution, the Federal Government continues to neglect our need for an efficient public transport system.

10. The World is now facing the inflationary pressure from the rising COP and acute shortage in food supply. Our country is blessed with abundance of crude oil. With the increased income derived from the rising COP, the Government has the ability to maintain lower and affordable petrol and diesel prices.

Due to the international economic factors, our country is also experiencing inflation. Unfortunately, there is no proportionate increase in the income of the People.

Therefore, in such times of economy difficulties and uncertainties, the Government ought to refrain from increasing the domestic petrol and diesel prices.

Given the above reasons, we urge Yang Amat Berhormat to reverse the cabinet’s decision to on 4th June, 2008 to increase the prices of petrol and diesel. We urge that the petrol and diesel prices be reduced to the pre-General Election level, ie. RM1.91 per litre of petrol and RM1.58 per litre of diesel in Sarawak.

In the interest of the People, we hope our plea herein will meet your kind approval.

Dated this 17th day of June, 2008.

Yours truly,

On behalf of Democratic Action Party, Kuching,

------------------------------ ---------------------------------
YB Chong Chieng Jen YB Voon Lee Shan
MP Bandar Kuching ADUN Batu Lintang
ADUN Kota Sentosa

YB Violet Yong Wui Wui
ADUN Pending