By MOHAMED ARIFF
Lower fuel subsidy will force consumers to pay market prices, making them more cost-conscious and raising fuel efficiency.
SUBSIDIES have long been used in many countries, both developed and developing, to encourage the production of some goods and services and/or to lighten the burden on consumers.
Many developing countries have resorted to fuel subsidies since 2004 to protect consumers from rising fuel prices. Malaysia has been subsidising liquefied natural gas (LNG) since January 1990, diesel since October 1999, and petrol since June 2005.
Fuel consumption in developed countries has been falling significantly in recent years, but rising sharply in developing countries – AFP
The main problems with price subsidy are that:
· it tends to encourage over-consumption and wastage,
· price distortions cause serious misallocation of resources, and hence economic inefficiency,
· it impedes supply and demand adjustments, and
· it is a source of strain on national budgets.
Fuel subsidy removals would force the consumers to pay market prices for fuel, making them more cost-conscious and raising fuel efficiency. One of the many causes of rising oil prices in the world today is excessive consumption attributed to fuel subsidy practised in many developing countries, including China.
Evidently, fuel consumption in developed countries has been falling significantly in recent years, but rising sharply in developing countries. The decline in developed countries has been more than offset by the rise in developing countries. If fuel subsidies are removed everywhere, fuel consumption would fall, thereby removing one of the major sources of price pressures.
It is pertinent to note that fuel consumption is taxed, not subsidised, in most developed countries, to penalise excessive consumption and to ensure fuel efficiency. Some developing countries, including India, are also taxing petrol, while subsidising diesel consumption, to be more equitable.
Abrupt removal of subsidies would cause considerable pain for consumers, especially those on tight household budgets. Since fuel is a strategic item, any sharp increase in fuel price would lead to price increases all over, with severe inflationary consequences. A gradual removal, based on a clear timeline and price formula, would do the trick.
Removal of fuel subsidies would raise costs, but since all countries across the board are affected, relative competitiveness of countries may not suffer much. Economic growth would suffer in the short run, as countries raise interest rates in the face of inflationary pressures, but economic efficiency will improve over time due to improvements in resource allocation.
The fact that Malaysia is a net exporter of oil does not really make a difference to the case for eliminating the fuel subsidy. As an oil exporter, Malaysia, of course, gains from the rising price of oil in the world market, but the point is that the oil revenue belongs to the future generation as well. Using the oil revenue to finance the fuel subsidy is tantamount to trading off the future for the present to the extent that resources are shifted from investment to consumption.
A hole in budget
Evidently, fuel subsidy has made a hole in the country’s budget, contributing to the fiscal deficit, which stood at 3.2%of gross domestic product (GDP) in 2007 when the price of petrol was at less than one-half of what it is today. One can imagine the budgetary strain fuel subsidy would cause this year at crude oil prices of about US$130 per barrel, if nothing were done to restructure the subsidy scheme.
Last year, fuel subsidy costs RM8.77bil, with crude oil prices averaging US$79. The fuel subsidy sum for 2008 was estimated at RM18.31bil based on the assumption that the price of crude oil would hover around US$105 per barrel. By the first week of June 2008, however, the price of oil had hit US$127 per barrel, way beyond earlier assumptions.
There are thus strong economic grounds for scrapping the fuel subsidy, but care must be taken to ensure that the subsidy system is undone in a gradual and orderly way so as not to impose undue hardship on people, especially the poor.
Seen in these terms, it is not difficult to understand why many governments in the region, including Indonesia, Malaysia and China, have recently resorted to subsidy cuts, which have resulted in higher retail prices of fuel.
Malaysia could have done much better, notwithstanding the fact that the Government could start with the right foot by raising fuel prices by 30 sen in February 2006 when the price of crude oil had hit US$67 per barrel. There have been talks of further price hikes as the price of crude oil soared beyond US$100 per barrel in December 2007, but there were none, presumably because the general elections were around the corner.
Lack of long term strategy
Another increase was not totally unanticipated after the general elections, given the rising trend in the price of crude oil. Early announcements had made people believe that fuel prices would be adjusted in such a way that consumers will have to pay market prices by August.
Consumers were caught unawares when the price of petrol jumped by a hefty 79 sen in the first week of June. An increase of 41% for petrol and 63% for diesel will have severe inflationary consequences. It is instructive to note that the 30 sen increase in February 2006 had led to 4.8% inflation in the following month.
It was estimated that the subsidy cutback on June 5 would yield a fiscal saving of RM13.7bil. The net saving will be much smaller after deducting rebate payments for motor vehicles that were implemented purportedly to soothe the pain.
If rebates were taken into account, the actual increase is said to be 23 sen, not 78 sen per litre. It would have been better if the increase was 30 sen with no rebates, as was the case previously.
The argument that the rebate has made the exercise more equitable is untenable, as the poor do not benefit directly from fuel subsidy in the first place, for they do not own vehicles, but do suffer from the inflationary consequences of subsidy cuts.
What is sadly missing is a long-term strategy to phase out fuel subsidy gradually, which calls for a clear time frame and a pragmatic pricing mechanism.
Emeritus Professor Datuk Dr Mohamed Ariff is the executive director of the Malaysian Institute of Economic Research.
Monday, June 30, 2008
Friday, June 27, 2008
Buying and selling signal
This article by Ooi Kok Hwa, tackles some basic skills needed to detect the buying and selling strength of a stock price.
THE price movement of a stock is dependent on the demand and supply of the stock, which in turn is influenced by the buyers’ buying interest and the sellers’ selling interest.
Every buyer or seller has different purposes when entering into a trade. The followings are general “rules”, which provide us with some hints on whether the stock price will probably go up or down.
Investors should not view these “rules” as a foolproof method that will hold true all the time. There are certain occasions that market manipulators might be using these “rules” to mislead the general public.
Rule 1: Buyers are showing small orders and sellers are showing big orders. However, the stock prices are holding quite well – buy signal.
When we want to purchase a stock, we will call our remisiers to check on buying or selling orders on the stock. A lot of selling orders with only a few buying orders on the stock may imply that the stock price would come down.
However, if the stock prices are holding quite well, it could mean there are some net buyers accumulating the stock.
The reason for this is buyers may refuse to show their buying orders to attract sellers to sell at the buyers’ buying price.
Showing high buying orders may delay selling interest, as sellers will wait for the buyers to buy at their selling price. Hence, it is a “buy” signal if we notice the above rule on any stock.
On the other hand, if buyers have big orders and sellers have small orders while the stock price continues to drop, it might be a “sell” signal that this stock has some big sellers that are not willing to show their selling orders but they need to sell the stock now.
Showing big selling orders may cause panic on the stock. Hence, to sell at higher prices, sellers will try to hide their selling orders.
Logically, if a stock has a strong buying interest, the stock price should go up instead of come down. Hence, the weakening stock price may imply that sellers outnumber buyers.
Rule 2: The overall market is weak but your stock price is moving against the overall market trend – buy signal.
In a down market, if a stock that you own is inching up steadily despite the overall weak stock market sentiment, this may imply that there are some net buyers on this stock.
We view this as a “buy” signal where buyers are eagerly accumulating the stock in spite of the weak market. In most instances, the stock price will move higher the moment the overall market sentiment recovers.
In contrast, if the overall market is moving up but your stock is being beaten down, it is a “sell” signal. Normally, insiders are aware of certain crucial bad news that is still not available to the market yet.
Rule 3: Stocks carry a lot of bad news and are trading at high volume but stock price remains stable – buy signal.
Sometimes a certain stock is facing huge bad news but the stock price is holding on quite well. Normally, it may imply that buyers are not worried about the market concerns on this stock. The current stock price may have discounted all the bad news.
In contrast, if a stock, despite having all the good news in the media, continues to see its price decline, this is a “sell” signal that shows there are certain sellers who have some concerns over the stock, but the overall market is still not aware of the news.
THE price movement of a stock is dependent on the demand and supply of the stock, which in turn is influenced by the buyers’ buying interest and the sellers’ selling interest.
Every buyer or seller has different purposes when entering into a trade. The followings are general “rules”, which provide us with some hints on whether the stock price will probably go up or down.
Investors should not view these “rules” as a foolproof method that will hold true all the time. There are certain occasions that market manipulators might be using these “rules” to mislead the general public.
Rule 1: Buyers are showing small orders and sellers are showing big orders. However, the stock prices are holding quite well – buy signal.
When we want to purchase a stock, we will call our remisiers to check on buying or selling orders on the stock. A lot of selling orders with only a few buying orders on the stock may imply that the stock price would come down.
However, if the stock prices are holding quite well, it could mean there are some net buyers accumulating the stock.
The reason for this is buyers may refuse to show their buying orders to attract sellers to sell at the buyers’ buying price.
Showing high buying orders may delay selling interest, as sellers will wait for the buyers to buy at their selling price. Hence, it is a “buy” signal if we notice the above rule on any stock.
On the other hand, if buyers have big orders and sellers have small orders while the stock price continues to drop, it might be a “sell” signal that this stock has some big sellers that are not willing to show their selling orders but they need to sell the stock now.
Showing big selling orders may cause panic on the stock. Hence, to sell at higher prices, sellers will try to hide their selling orders.
Logically, if a stock has a strong buying interest, the stock price should go up instead of come down. Hence, the weakening stock price may imply that sellers outnumber buyers.
Rule 2: The overall market is weak but your stock price is moving against the overall market trend – buy signal.
In a down market, if a stock that you own is inching up steadily despite the overall weak stock market sentiment, this may imply that there are some net buyers on this stock.
We view this as a “buy” signal where buyers are eagerly accumulating the stock in spite of the weak market. In most instances, the stock price will move higher the moment the overall market sentiment recovers.
In contrast, if the overall market is moving up but your stock is being beaten down, it is a “sell” signal. Normally, insiders are aware of certain crucial bad news that is still not available to the market yet.
Rule 3: Stocks carry a lot of bad news and are trading at high volume but stock price remains stable – buy signal.
Sometimes a certain stock is facing huge bad news but the stock price is holding on quite well. Normally, it may imply that buyers are not worried about the market concerns on this stock. The current stock price may have discounted all the bad news.
In contrast, if a stock, despite having all the good news in the media, continues to see its price decline, this is a “sell” signal that shows there are certain sellers who have some concerns over the stock, but the overall market is still not aware of the news.
Understanding the stock market rules
Stock Market Rules by Ooi Kok Hwa
In this article, we will highlight a few common and important ‘rules’ that are crucial to most investors.
Your purchase price is irrelevant when you consider selling a stock.
Most people always find it difficult to sell a stock at a price lower than the purchase price because this means making a loss.
For example, if you purchase a stock at 90 sen, you will not sell the stock lower than 90 sen as this means a loss to you.
You will most likely hold on to it until you are able to sell it at higher than 90 sen.
Unfortunately, your stock never remembers how much you have paid for it. You have memory of the purchase price but not the stock.
As a result, some investors end up holding on to lousy stocks with poor fundamentals.
The longer you hold on to these stocks, the higher the losses that you will incur.
Hence, the timing to sell stocks with poor fundamental will depend very much on when you are able to admit that you have made a mistake purchasing them.
Deciding whether to sell when the price is falling or continue to hold on to it with the hope it will recover and break even depends on the fundamentals of the stock.
The target selling price for a stock should be based on the future prospects of the company instead of the price that you paid for the stock.
Thus, you need to “sell the losers and let the winners run”.
For stocks with good value, you should consider holding them for a longer time.
Lately, some second liners with good fundamentals have been hammered down to very low levels. Some of them are even selling at lower than the owner’s cost (lower than book value).
However, not many investors are excited about those stocks although they are currently selling at a very cheap valuation.
Most investors worry that the price will go down further after they have bought it.
It is very hard to predict the market bottom. Based on our observation, certain fundamentally strong stocks may have temporarily found bottom despite the recent market sell down.
We think it is a good time to nibble on some good value stocks and keep them for the long term.
Even though the price will get cheaper than your purchase price tomorrow, we believe the current price should not be too far from the bottom.
Investors need to remember that the returns are based on the selling price. You may purchase the stock at a relatively higher price during a downtrend.
However, if the stock has great potential and you are patient enough to hold on and wait until the market recovers, you can still get higher returns than someone who may be lucky to purchase this stock at the lowest price but sell it too early.
As mentioned earlier, buying before the market reaches bottom is “buy low, sell high”.
However, to a certain group of investors it is safer to buy only when the market has found the bottom and started to recover rather than trying to predict where the market bottom is.
They prefer to buy the stock at a higher price because they believe they can sell it at a higher price. This is “buy high, sell higher”.
For those who prefer the “buy low, sell high” strategy, as you are buying before the market is touches bottom, you need to stagger your purchases so that you have enough bullets to average down your purchase price if the stock price drops further.
For those who prefer to “buy high, sell higher”, they need to prepare themselves mentally to buy at higher stock prices.
This might be a problem to investors as they are not willing to pay for higher stock prices as they always remember the recent lowest prices.
They may end up buying nothing but still hoping the stock price will come down one day.
In this article, we will highlight a few common and important ‘rules’ that are crucial to most investors.
Your purchase price is irrelevant when you consider selling a stock.
Most people always find it difficult to sell a stock at a price lower than the purchase price because this means making a loss.
For example, if you purchase a stock at 90 sen, you will not sell the stock lower than 90 sen as this means a loss to you.
You will most likely hold on to it until you are able to sell it at higher than 90 sen.
Unfortunately, your stock never remembers how much you have paid for it. You have memory of the purchase price but not the stock.
As a result, some investors end up holding on to lousy stocks with poor fundamentals.
The longer you hold on to these stocks, the higher the losses that you will incur.
Hence, the timing to sell stocks with poor fundamental will depend very much on when you are able to admit that you have made a mistake purchasing them.
Deciding whether to sell when the price is falling or continue to hold on to it with the hope it will recover and break even depends on the fundamentals of the stock.
The target selling price for a stock should be based on the future prospects of the company instead of the price that you paid for the stock.
Thus, you need to “sell the losers and let the winners run”.
For stocks with good value, you should consider holding them for a longer time.
Lately, some second liners with good fundamentals have been hammered down to very low levels. Some of them are even selling at lower than the owner’s cost (lower than book value).
However, not many investors are excited about those stocks although they are currently selling at a very cheap valuation.
Most investors worry that the price will go down further after they have bought it.
It is very hard to predict the market bottom. Based on our observation, certain fundamentally strong stocks may have temporarily found bottom despite the recent market sell down.
We think it is a good time to nibble on some good value stocks and keep them for the long term.
Even though the price will get cheaper than your purchase price tomorrow, we believe the current price should not be too far from the bottom.
Investors need to remember that the returns are based on the selling price. You may purchase the stock at a relatively higher price during a downtrend.
However, if the stock has great potential and you are patient enough to hold on and wait until the market recovers, you can still get higher returns than someone who may be lucky to purchase this stock at the lowest price but sell it too early.
As mentioned earlier, buying before the market reaches bottom is “buy low, sell high”.
However, to a certain group of investors it is safer to buy only when the market has found the bottom and started to recover rather than trying to predict where the market bottom is.
They prefer to buy the stock at a higher price because they believe they can sell it at a higher price. This is “buy high, sell higher”.
For those who prefer the “buy low, sell high” strategy, as you are buying before the market is touches bottom, you need to stagger your purchases so that you have enough bullets to average down your purchase price if the stock price drops further.
For those who prefer to “buy high, sell higher”, they need to prepare themselves mentally to buy at higher stock prices.
This might be a problem to investors as they are not willing to pay for higher stock prices as they always remember the recent lowest prices.
They may end up buying nothing but still hoping the stock price will come down one day.
Buy stocks with low price-to-book ratio
Personal Investing
By Ooi Kok Hwa
A fortnight ago, we elaborated on four of the seven criteria used in stock selection. In this week's article, we continue with the remaining three criteria: B for Book Value, H for Health and M for Management.
THE book value of a company is an important indicator of a company’s value as it tells us what the owner’s cost of a company is. No owner would be willing to sell a healthy and growing company at below cost unless the company has problems that are not known by general public.
Normally, we use book value per share (total shareholders’ funds divided by the outstanding number of shares of a company) to compare with the current stock price.
Price-to-book ratio is computed by dividing the stock price by a company's book value per share. It gives us the number of times the current stock is selling above or below the book value.
A ratio of lower than one means the current stock price is trading at lower than its book value.
One of the selection criteria is to select stocks with lower price-to-book ratio.
Benjamin Graham in his book entitled Security Analysis said we should consider buying stocks with price-to-book of lower than 1.5x. The number 1.5x or below implies that the maximum price that we pay for a company should not exceed 50% of the owner’s cost.
Due to the implementation of new financial reporting standards, there have been a lot of write-downs and impairment on certain assets of listed companies.
As a result, we can safely say that the current book value of these companies should reflect the owner’s real cost.
The price-to-book ratio is also frequently used in valuing banking, finance and insurance companies. In most instances, it is quite difficult to search for financial institutions that are selling at below their book values. This is because the book value is mostly in cash.
Normally owners would not accept any value that is less than the book value. This explains why most analysts use the price-to-book ratio in valuing financial institutions.
H for Health refers to the financial health of a company. We use debt-to-equity ratio (D/E ratio) to determine the level of borrowings of a company.
It is computed by taking a company's total debts and dividing it by a company's total shareholders’ funds.
A lower ratio implies that the company is using less debt but more equity to fund its operations. Even though cost of borrowing is lower than cost of equity, most investment gurus prefer companies to use less debt.
It will be even better if we are able to find companies that are cash rich and have zero borrowings.
According to Graham, a good company should have a D/E ratio of less than 0.5x. It means that for every RM1 the owner puts into the company, the maximum amount that he should borrow is 50 sen.
The rationale is to look for companies with lower financial risk - lower borrowings mean companies pay less interest expenses and face lower bankruptcy risk.
M for Management refers to companies with high management quality. It is always very difficult to determine the management quality of a company.
Almost all investment gurus, like Graham, Philip Fisher and Warren Buffett say that the management quality is one of the most important factors in stock selection.
A good management should exhibit unquestionable management integrity and try their best to maximise shareholders’ wealth through high dividend payment and capital gains.
It is almost impossible for each listed company to consistently show high profit during all periods, especially in a weak economy.
However, a good management will make sure that they are able to perform better than their peers even in the toughest business environment.
By Ooi Kok Hwa
A fortnight ago, we elaborated on four of the seven criteria used in stock selection. In this week's article, we continue with the remaining three criteria: B for Book Value, H for Health and M for Management.
THE book value of a company is an important indicator of a company’s value as it tells us what the owner’s cost of a company is. No owner would be willing to sell a healthy and growing company at below cost unless the company has problems that are not known by general public.
Normally, we use book value per share (total shareholders’ funds divided by the outstanding number of shares of a company) to compare with the current stock price.
Price-to-book ratio is computed by dividing the stock price by a company's book value per share. It gives us the number of times the current stock is selling above or below the book value.
A ratio of lower than one means the current stock price is trading at lower than its book value.
One of the selection criteria is to select stocks with lower price-to-book ratio.
Benjamin Graham in his book entitled Security Analysis said we should consider buying stocks with price-to-book of lower than 1.5x. The number 1.5x or below implies that the maximum price that we pay for a company should not exceed 50% of the owner’s cost.
Due to the implementation of new financial reporting standards, there have been a lot of write-downs and impairment on certain assets of listed companies.
As a result, we can safely say that the current book value of these companies should reflect the owner’s real cost.
The price-to-book ratio is also frequently used in valuing banking, finance and insurance companies. In most instances, it is quite difficult to search for financial institutions that are selling at below their book values. This is because the book value is mostly in cash.
Normally owners would not accept any value that is less than the book value. This explains why most analysts use the price-to-book ratio in valuing financial institutions.
H for Health refers to the financial health of a company. We use debt-to-equity ratio (D/E ratio) to determine the level of borrowings of a company.
It is computed by taking a company's total debts and dividing it by a company's total shareholders’ funds.
A lower ratio implies that the company is using less debt but more equity to fund its operations. Even though cost of borrowing is lower than cost of equity, most investment gurus prefer companies to use less debt.
It will be even better if we are able to find companies that are cash rich and have zero borrowings.
According to Graham, a good company should have a D/E ratio of less than 0.5x. It means that for every RM1 the owner puts into the company, the maximum amount that he should borrow is 50 sen.
The rationale is to look for companies with lower financial risk - lower borrowings mean companies pay less interest expenses and face lower bankruptcy risk.
M for Management refers to companies with high management quality. It is always very difficult to determine the management quality of a company.
Almost all investment gurus, like Graham, Philip Fisher and Warren Buffett say that the management quality is one of the most important factors in stock selection.
A good management should exhibit unquestionable management integrity and try their best to maximise shareholders’ wealth through high dividend payment and capital gains.
It is almost impossible for each listed company to consistently show high profit during all periods, especially in a weak economy.
However, a good management will make sure that they are able to perform better than their peers even in the toughest business environment.
Stocks fall, oil at record US$140
By JOSEPH CHIN
KUALA LUMPUR: Stocks opened sharply lower Friday as investors’ sentiment took another round of battering, weighed down by the fall on Wall Street as oil spiked to a new record high of US$140.39.
At 9.30am, the KLCI was down 16.75 points to 1,187.14. Turnover was 37 million shares valued at RM83.88mil. There were 25 gainers, 224 losers and 71 counters unchanged.
Asian markets fell, with Japan’s Nikkei 225 down 280 points or 2.03% to 13,542.27, Singapore’s Straits Times Index lost 1.73% to 2,929.51 while Shanghai’s A Sahre index opened 3.58% lower at 2,935.23.
In New York, US stocks plunged Thursday, with the Dow sliding about 360 points to a 21-month low as oil hit a record and Wall Street powerhouse Goldman Sachs urged investors to sell bank and automaker shares, escalating concern about the outlook for profits.
Reuters reported that oil surged above US$140 a barrel in New York trading, compounding fears that soaring inflation will hamper a global economy already on the ropes.
General Motors' stock sank to its lowest level in 53 years, after Goldman warned that the big US automaker could have to raise capital and cut dividends in a brutal slowdown for the auto industry.
The Dow Jones industrial average slid 358.41 points, or 3.03%, to 11,453.42, putting it within the grasp of a bear market.
At Bursa, the major losers were BAT and DiGi, down 50 sen each to RM43.25 and RM23.90, TM International 35 sen lower to RM6.35, KL Kepong 30 sen to RM17.20 while Genting lost 25 sen to RM5.55 and Public Bank and IJM 20 sen each to RM10.30 and RM5.25.
Luxchem, which made its debut, fell 16.5 sen to 93.5 sen.
Aictively-traded AirAsia fell 2.5 sen to 82.5 sen while Resorts and Gamuda gave up three sen each to RM2.68 and RM2.30 respectively, MRCB shed two sen to RM1.14.
KUALA LUMPUR: Stocks opened sharply lower Friday as investors’ sentiment took another round of battering, weighed down by the fall on Wall Street as oil spiked to a new record high of US$140.39.
At 9.30am, the KLCI was down 16.75 points to 1,187.14. Turnover was 37 million shares valued at RM83.88mil. There were 25 gainers, 224 losers and 71 counters unchanged.
Asian markets fell, with Japan’s Nikkei 225 down 280 points or 2.03% to 13,542.27, Singapore’s Straits Times Index lost 1.73% to 2,929.51 while Shanghai’s A Sahre index opened 3.58% lower at 2,935.23.
In New York, US stocks plunged Thursday, with the Dow sliding about 360 points to a 21-month low as oil hit a record and Wall Street powerhouse Goldman Sachs urged investors to sell bank and automaker shares, escalating concern about the outlook for profits.
Reuters reported that oil surged above US$140 a barrel in New York trading, compounding fears that soaring inflation will hamper a global economy already on the ropes.
General Motors' stock sank to its lowest level in 53 years, after Goldman warned that the big US automaker could have to raise capital and cut dividends in a brutal slowdown for the auto industry.
The Dow Jones industrial average slid 358.41 points, or 3.03%, to 11,453.42, putting it within the grasp of a bear market.
At Bursa, the major losers were BAT and DiGi, down 50 sen each to RM43.25 and RM23.90, TM International 35 sen lower to RM6.35, KL Kepong 30 sen to RM17.20 while Genting lost 25 sen to RM5.55 and Public Bank and IJM 20 sen each to RM10.30 and RM5.25.
Luxchem, which made its debut, fell 16.5 sen to 93.5 sen.
Aictively-traded AirAsia fell 2.5 sen to 82.5 sen while Resorts and Gamuda gave up three sen each to RM2.68 and RM2.30 respectively, MRCB shed two sen to RM1.14.
Wednesday, June 4, 2008
Time to change spending pattern, says Fomca
By PAUL CHOO
KUALA LUMPUR: Malaysians have been told to evaluate their lifestyles to meet the inevitable rise in petrol prices.
Federation of Malaysian Consumer Associations president Datuk N. Marimuthu said the rakyat must understand that the price increase stems from a global issue of soaring oil prices, and not a Malaysian issue.
“We must re-evaluate ourselves in terms of spending to prepare for the inevitable increase. It is not only us who are suffering. Other countries are faring even worse than Malaysia. So we should not just blame the Government in the event of price increases,” he said when contacted yesterday.
He advised consumers to take into account any avenues to reduce costs, such as using less electricity, having more meals at home and having a thorough financial plan.
National Consumer Complaints Centre director Darshan Singh, who did not want to comment until the announcement on a new fuel subsidy scheme was made, said: “Consumers definitely must bear in mind that they need to be prepared for any eventuality, and that includes a sudden soar in petrol prices.”
A CAP spokesman agreed that consumers would have to change their lifestyle, but at the same time urged the Government to divert some of the fuel subsidies into public transportation.
“On average an individual spends 30% of his salary on petrol and car repayment, which is why if a new fuel subsidy is to be announced, some of it should be diverted into public transportation,” said the spokesman.
“This move would work towards encouraging more people to save on their travelling by using public transportation.”
KUALA LUMPUR: Malaysians have been told to evaluate their lifestyles to meet the inevitable rise in petrol prices.
Federation of Malaysian Consumer Associations president Datuk N. Marimuthu said the rakyat must understand that the price increase stems from a global issue of soaring oil prices, and not a Malaysian issue.
“We must re-evaluate ourselves in terms of spending to prepare for the inevitable increase. It is not only us who are suffering. Other countries are faring even worse than Malaysia. So we should not just blame the Government in the event of price increases,” he said when contacted yesterday.
He advised consumers to take into account any avenues to reduce costs, such as using less electricity, having more meals at home and having a thorough financial plan.
National Consumer Complaints Centre director Darshan Singh, who did not want to comment until the announcement on a new fuel subsidy scheme was made, said: “Consumers definitely must bear in mind that they need to be prepared for any eventuality, and that includes a sudden soar in petrol prices.”
A CAP spokesman agreed that consumers would have to change their lifestyle, but at the same time urged the Government to divert some of the fuel subsidies into public transportation.
“On average an individual spends 30% of his salary on petrol and car repayment, which is why if a new fuel subsidy is to be announced, some of it should be diverted into public transportation,” said the spokesman.
“This move would work towards encouraging more people to save on their travelling by using public transportation.”
Petrol dealers brace for tough times
By M.KRISHNAMOORTHY
KUALA LUMPUR: Petrol dealers are expecting fuel prices to go up and will face tough times when that happens.
Petroleum Dealers Association of Malaysia (PDAM) acting president Abdul Wahid Bidin said operating costs would go up when the price of petrol increases.
This was because most people would pay for their purchases with credit cards and the amount of commission paid to credit card companies would eat into the dealers' profits.
“If the petrol price goes up we will suffer because we will need extra working capital by about 30% if the increase is by about 30%.,” he said.
Abdul Wahid said that for every litre of petrol sold, the dealers would have to pay 1% of the sale amount to the credit card company in commission.
And, another 1% is lost in the evaporation of petrol.
Abdul Wahid wants the Government to get the consumers to share the burden of the credit card commission.
On an average, if a dealer gets an income of RM40,000 a day, he would have to pay out RM300 per day as commission to the credit card companies.
To resolve this problem, he proposed that the Government introduces a two-tier pricing system, one for cash sales and other for credit card users.
“The price for using a credit card will be higher and cash sales may be a few sen lower. This would discourage people from using credit cards,” he said.
KUALA LUMPUR: Petrol dealers are expecting fuel prices to go up and will face tough times when that happens.
Petroleum Dealers Association of Malaysia (PDAM) acting president Abdul Wahid Bidin said operating costs would go up when the price of petrol increases.
This was because most people would pay for their purchases with credit cards and the amount of commission paid to credit card companies would eat into the dealers' profits.
“If the petrol price goes up we will suffer because we will need extra working capital by about 30% if the increase is by about 30%.,” he said.
Abdul Wahid said that for every litre of petrol sold, the dealers would have to pay 1% of the sale amount to the credit card company in commission.
And, another 1% is lost in the evaporation of petrol.
Abdul Wahid wants the Government to get the consumers to share the burden of the credit card commission.
On an average, if a dealer gets an income of RM40,000 a day, he would have to pay out RM300 per day as commission to the credit card companies.
To resolve this problem, he proposed that the Government introduces a two-tier pricing system, one for cash sales and other for credit card users.
“The price for using a credit card will be higher and cash sales may be a few sen lower. This would discourage people from using credit cards,” he said.
Petrol to cost RM2.70 from midnight
KUALA LUMPUR: Prime Minister Datuk Seri Abdullah Ahmad Badawi on Wednesday announced price hikes for petrol, diesel and electricity.
He said the new price for petrol is RM2.70 a litre, effective midnight tonight. The price goes up by 78sen from the current RM1.92, a hike of 40%.
Abdullah also announced that the price of diesel would be increased by RM1 from RM1.58 to RM2.58.
He also said that Tenaga Nasional Bhd would be raising electricity rates by 18% for homes and 26% for business users.
The announcements are part of the new fuel subsidy plan.
Abdullah also announced a RM625 annual cash rebate per vehicle, for owners of private vehicles with engine capacities of up to 2,000cc, as well as pickup trucks and jeeps with engine capacities of up to 2,500cc.
Owners of private motorcycles with engine capacities of up to 250cc will receive RM150.
Payment will be made via Money Order upon renewal of road tax, from July 1.
For owners of private vehicles with engine capacities exceeding 2000cc, road tax will be reduced by RM200.
Owners of private motorcycles with engine capacities above 250 cc will get RM50 reduction in road tax.
He said the new price for petrol is RM2.70 a litre, effective midnight tonight. The price goes up by 78sen from the current RM1.92, a hike of 40%.
Abdullah also announced that the price of diesel would be increased by RM1 from RM1.58 to RM2.58.
He also said that Tenaga Nasional Bhd would be raising electricity rates by 18% for homes and 26% for business users.
The announcements are part of the new fuel subsidy plan.
Abdullah also announced a RM625 annual cash rebate per vehicle, for owners of private vehicles with engine capacities of up to 2,000cc, as well as pickup trucks and jeeps with engine capacities of up to 2,500cc.
Owners of private motorcycles with engine capacities of up to 250cc will receive RM150.
Payment will be made via Money Order upon renewal of road tax, from July 1.
For owners of private vehicles with engine capacities exceeding 2000cc, road tax will be reduced by RM200.
Owners of private motorcycles with engine capacities above 250 cc will get RM50 reduction in road tax.
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