If it were true, kick and scream!

recent petrol price increases has sparked debates on subsidies, car duties, petronas and current oil prices.

however, there has been something running behind some minds and i am intrigued by that theory. If it were true, its shocking!


"An estimated of RM 162 billions had been collected over the past 22 years. Actual figures could be much higher..

By A concern citizen

Recent fuel hike had sparked anger across the country asking Petronas account to be made available for public scrutiny to justify why the government cannot continue to subsidy the fuel. May be all these while, Petronas may not be footing 100% of the fuel bill, is the car owners had paid in advance for fuel subsidy in form of import and excise duties for both local and foreign made vehicles, as suggested by one article published in the Star recently, and republished by Malaysia Today.

Following up on this topic, I had done a little research myself, and may be others had already done it but did not get highlighted in a wider angle. I had visited the website of Malaysia Automotive Association to get the statistic of total vehicle sale from 1986 till 2007, to get a broad idea of estimated excise and import duties might have been collected by the government since the inception of Proton, as the import duties were imposed for the excuse of protecting our new start up that suppose to make our nation pride in years to come. Well, Proton is not an issue for our discussion here, so we will not talk about it's success or failure and the failure cost to the rakyat. Let's us guestimate how much we had contributed to the government coffers since 1986.

Total vehicle sales since 1986 amounted to 6,264,910 units, both passengers and commercial vehicles included. (Source: http://www.maa.org.my/info_summary.htm). Assuming the ratio of 60% of total vehicles being locally produced, and rest of them are being imported. Also assuming average duty collected from local car is RM 10K each, and RM 50K for imported vehicles. Please note that I had made broad assumption, as the actual figure was never reported by the government in their annual budget and accounts.

An estimated of RM 162 billions had been collected over the past 22 years. Actual figures could be much higher as import tax was relatively high in the 90s before we signed the ASEAN free trade agreement. Where had the money gone? How much fuel subsidy had been given by the government on fuel after being offset by the car duties?" http://www.malaysia-today.net/2008/content/view/8763/1/

here's a thought, is it possible that the automotive duties actually went into subsidizing fuel for us? so rather than actually having a subsidy, we are actually paying for the subsidy up front with a tax? the automobile duty figure itself would be higher really, 50k assumes that all foreign cars are taxed 50k when we know there are quite a number of merz's bm's and sports coupes in Malaysia, some are taxed up to 300%

assuming the govt actually spends about RM 16.2 bn a year on fuel subsidies from the car duty, it would last 10 years. RM 16.2 bn is a rough average out estimate due to low oil prices in the 1990s and current trend of oil prices. Proton's inception came at 1983 with it fully running by 1985. "Based on technology and parts from Mitsubishi Motors, production of the first model, the Proton Saga began in September 1985 at its first manufacturing plant in Shah Alam, Selangor." http://en.wikipedia.org/wiki/Proton_%28carmaker%29
till now it has been about 20-22 years since proton produced its first cars and automobile taxes are first introduced.

Based on these assumptions, Petronas's contribution towards a subsidy might not be much despite it making profits year in year out as oil companies do. As usual GLC accounts and government accounts are hard to come by. If we were paying for a tax up front to get a subsidy on petrol, that would really be a sucker-punch, paid tax up front in a form of a lump sum has it's opportunity costs, where the money can be used currently or invested by you and me for a rate of return in the future rather than receiving a fix portion of subsidies. Although profits from petronas might be used to plug the gaps of say 8 years, it might not be as much as it may seem as. Hence Petronas now will not have solely contributed much towards the subsidy with this assumption despite Petronas being ranked among Fortune Global 500's largest corporations in the world, has grown to be an integrated international oil and gas company with business interests in 31 countries and recording a pre-tax profit of RM 76.3 billion this year alone in line with global price hikes. And yet the chap from Petronas, CEO Hassan Merican told reporters today that "Petronas could go bankrupt in 10 years if all of its profits are handed over to the government to support fuel subsidies" which is alleged to amount to roughly RM 30 bn this year due to high oil prices (not considering what the public might/already have contributed to the subsidy)

Shocking indeed? this would mean the government actually takes from the people and appears to be giving to the public without actually giving and this comes in the backdrop of Malaysia being a net oil producer during those years. So did we enjoy the nation's oil wealth? Maybe a bit, not much thats for sure! allegations of mismanagement of funds and corruption are not all that far fetched too as most belief. One thing's for sure, as they say, overly distorting the market breeds all sorts of inefficiency and rent seeking (corruption and mismanagement) which I agree here despite not being a fan of fully blown free-market principles....

Essentially now, with the "subsidy" gone or almost gone (if there were ever a state give out of sizable amounts?), people are asking, "where did all the oil profits go to?" since its all going to dry up in 10 years or so...

Where are the accounts of the government and Petronas!?