Let me add my comments on the issue of price increases and economic distortions facing the rakyat and Malaysian-based industries.

While price increases arising from the increasing cost of oil in the internationally-traded markets is justified, this is only acceptable to us Malaysians if all the other major components of our expenditures are also priced at free-trade levels.

By all means remove the fuel subsidies but only if taxes (excise duties/import taxes) applied on cars are reduced correspondingly. Otherwise the competitive position of the various sectors of the economy will be distorted and as consumers, Malaysians are made to suffer for no valid reason.

Note that as a consumer, I spend a very significant portion of my disposable income (beyond what is justified by free-trade values) on monthly car loan repayments - an amount that could be used more productively, for instance, to support the retail and service sectors or that can be invested. The cost to businesses is also unnecessarily high as they have to pay higher salaries for their employees to drive a car.

The wealth that Petronas generates from our natural oil and gas resources belongs to all Malaysians and should only be used for capital expenditure projects that benefit the rakyat ie, schools, hospitals/medical subsidies, infrastructure etc. Certainly not to subsidise consumption- operating expenditures such as civil servant salaries, fancy sports events or the like!

At the national level, the situation viz economic sector distortions has really gotten out of hand. We all know about the auto sector and the Proton story. But also witness how individual states like Sabah and Sarawak have unilaterally imposed 'sales taxes' on the internationally competitive palm oil sector to increase their states' revenues.

Taxes in various economic sectors come under the purview of the federal government, not the state governments'. They should apply to all sectors in all states in the event the federal government thinks it fit to go against WTO principles.

This unilateral imposition of taxes at the state level affects sectoral efficiencies within the country and scares away domestic investors (let alone foreign investors). To a palm oil-based company, a 7.5 percent sales tax on its palm oil crop sales is a tax on gross income, roughly equivalent to about a 20 percent tax on net income.

To add salt to the injury, the affected companies also have to pay the normal 27 percent corporate income tax on profit. Who is going to invest in the palm oil sector in these states - it's economic suicide.

Such investors invest huge amounts and effort on projects with long gestation periods and now find all their investment decisions made a mockery off. And what about the palm oil smallholders? These poor rural people now have the state government leeching off the sweat of their labour!

And now Sabah wants to increase the 7.5 percent sales tax to 10 percent. Beautiful. Malaysia's economic policies are so messed up but it had better get its act together soon. The rest of the world is not standing still.