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Wednesday, January 20, 2010

Follow the US style to determine petrol prices

IT is good that the public is having discussions on the GST, subsidised goods, missing foreigners, petrol pricing and the use of MyKad to assist in differentiating between the subsidised and unsubsidised petrol user.

I am a bit pessimistic with regard to most of the current inflation-related issues. I am worried about the flip-flop repercussions of any decision. We have seen government decisions made and later there is a change of mind due to public empathy.

I would like to offer a proposal on petrol pricing. I am sure many Malaysians understand the disadvantages of a subsidy mentality in the economic sense. As we are going into a high income economy, subsidising essentials must be kept to a minimum and the saved resources should be allocated to new economic spending areas, such as in R&D, biomedicine, branding, etc.

Let us take, for example, how petrol prices are charged at the pump in the United States. In states that are producing oil, such as Texas, petrol prices are the cheapest while prices in the states that are furthest from the refineries are the highest. I am not sure how the MyKad can assist in this exercise.

I feel that states such as Kuala Lumpur, Selangor, Penang and Johor should not have any subsidies at all. The standard of living in these states is higher compared to that of Kelantan or Perlis.

Maybe users in those states where the per capita income is lower should pay RM1.80 per litre while those in states with higher capital income should pay RM2.10 per litre. This would better improve the distribution of resources.

Even with the current pricing and the use of the MyKad, it won’t be fair and it won’t stop the pilferage. Let’s give this a try. There won’t be any incentive for Singaporeans to drive all the way to Malacca just to get cheaper petrol and driving back to Singapore.

As for those in Kelantan and Perlis, issues such as smuggling will still happen regardless of monthly rationing or with the MyKad.

Kuala Lumpur.

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