I am writing this from the other side of the world so a petrol price rise in Malaysia does not mean that much to me. But I appreciate that an increase in petrol price might have a flow on effect in secondary price rises in other goods that use transport to reach their market, like most essential goods and food items.
I don't buy much petrol, maybe on average NZ$20-NZ$30 a week. You see, for the past two years since the price of petrol started rising in (over here it was NZ80 cents [RM1.50 back then] a litre five years ago, now NZ$1.49 [RM3.70 now], I have been using my old trusty bicycle.
I only use my car to transport the kids and whenever I need to transport stuff like groceries from the supermarket. Now, I am not suggesting that everyone should bike to work, it would take an hour if you live 15km away, but if it just 5-6kms, it would be good for your body. You can do away with your weekly gym session! If public transport is available and possible, why not use it? Over here, secondhand bicycle prices have been rising steadily for the past two years. A sure sign that people are starting to use alternative forms of transport and save the world's energy resources, in this case oil, at the same time.
I applaud the government move to face the reality that higher oil prices, and hence higher petrol prices, are here to stay. Over a year ago, I wrote suggesting the government do away with the petrol subsidy and let petrol prices at the pump reflect world prices. The subsidy benefits the rich instead of the poor for after all, small cars and motorbikes don't use much petrol while big cars driven by the rich do. I also suggested the money saved, estimated to be RM4.1billion, be used to improve public transport in the country. It is heartening to see that there might be somebody in the policy department read my letter here in malaysiakini and took it onboard.
No doubt that a petrol price hike is inflationary, and it will eat a huge chunk of the ordinary Malaysian's pay packet if they keep on using their car just to go to work or to the neighbourhood nasi lemak stall a couple of miles from home. But if everyone changed their habits, used public transport or a bicycle for short distances, the decision to raise the petrol prices would result in billions of ringgit saved from wastage.
We would reasonably expect that after the price rise, people would economise and buy less petrol (in litres) so the amount of subsidy would also be less. For example, if the original amount of petrol consumed was 10 million litres, with the price rise, the amount consumed can be expected to be less, say 8 million litres. A huge amount of savings is already made.
For this theory to hold, the quantum of the price rise has to be big enough so that consumers would be forced to change their habits. If the price rises only by 2-3 sen every six months, this might not hit consumers' pocket too much and they wouldn't change their habits. So the government's decision to raise the petrol price by 30 sen is correct. Hopefully, Malaysians would use public transport and bicycles for a change.
As for the flow on secondary effect on prices of goods and services that need to be transported to reach their market, my experience here tells me that the prices of food and other goods and services should not increase, except for bus fares. Firms in the transport industry learn to improve their efficiency (less frequent but larger deliveries) or introduce surcharges for fuel components like airfare ticket these days. Over time, Malaysians will realise sooner or later that their expectations that prices are rising are baseless.
What about the huge profits from Petronas? I would rather receive it in the form of a cash dividend (as Malaysians, we all have a share in this government company) rather let the profit be guzzled by Mercedes-driving countrymen/women who demand that their petrol be subsidised.
As I said previously, small cars or motorbikes don t use much petrol, big cars do. Yes, we read about their complaints but I suspect most of them are middle-class, 2-3 car households and live in double-storey houses in the suburbs being well-educated enough to be able to write eloquent letters to the editor. They're not bicycle-riding ones like me!