Saturday, June 7, 2008

Back to Basics: 1968-2008

1968 to 2008, that is a not that long a time. That is merely 40 years and is a flick of an eyelid in terms of civilisations. So let us look at 1968. Then let us fast-forward 40 years to 2008. What I want you to see is how better life is today compared to what we had to go through 40 years ago. Maybe, once you realise this, you can then enjoy your weekend and will not allow the recent petrol price increase and the doubling of the price of rice dampen your spirit.

In 1968, salaries were only half what they are today. So that is an improvement of sorts. Today, policemen are earning double what they earned 40 years ago (which means corruption in the police force has practically been eliminated). So goes the same for labourers and university graduates. Everyone, today, is earning double what we earned 40 years ago.

Okay, maybe 40 years ago petrol was only about RM0.20 per litre compared to almost RM3.00 today -- and maybe more than RM4.00 by August. But life can't revolve just around the price of petrol. There are many other things we must also take into consideration in coming to the conclusion whether, today, life is better, or worse, compared to 40 years ago.

In 1968, you had to fork out RM3,000 to buy a lower-end car such as a Volkswagen. A 'sporty' car would set you back RM5,000. And if you wanted to drive around in style, then be prepared to suffer a damage of RM18,000 for a Mercedes Benz. And if you had no money but still needed a simple means of transportation, then for a few hundred Ringgit you could zip around on a silly Honda Cub.

Though RM18,000 for the Mercedes Benz sounds very cheap, actually it was quite a lot of money to pay for a car considering that, for that same amount of money, you could buy a house -- or two houses if you are prepared to live in a middle-class neighbourhood like Subang Jaya or Petaling Jaya. And if you lived in a 'third class' town like Seremban, Ipoh, Kuantan, Muar, etc., then your house could cost as much as your RM3,000 Volkswagen.

So, RM3,000 for a lower-end car or RM5,000 for something better or RM18,000 for a luxury limousine was not cheap back in 1968. That was the price of a house. We used to call them 'house on wheels', and for good reason as well. Can you see how unfortunate we were 40 years ago? Plus, 40 years ago, we were earning only half the salaries you are earning today.

It was a few years later before I could afford to buy my first car, an imported Mitsubishi Galant 1600, which cost me RM9,800 (a lot of money to pay for a car in 1972). This was followed, two years later, by my first house, which cost me RM18,000.

Yes, it was a cheap house, a single-storey bungalow overlooking the South China Sea in Kuala Terengganu. But then 40 years ago our salaries were only half what they are today. So we did not really have that much money to spend. Today, you will be earning double what I was earning 40 years ago. So, today, you have twice the amount of money I had 40 years ago.

Because I was earning only half the money you are earning today, I could only buy a RM9,800 imported Mitsubishi Galant 1600 and a RM18,000 single-storey bungalow overlooking the South China Sea way out in the boondocks (tempat jin bertendang, as the Malays would say). I could not afford a house in Kuala Lumpur.

Can you see how poor we were, then, compared to you, today, who are earning double the salary we were earning 40 years ago? Today, you do not need to buy a cheap RM9,800 imported Mitsubishi Galant 1600. Because, today, you are earning double the salary we were earning 40 years ago, you can buy a RM100,000 car, and there are so many makes and models to choose from on top of that. Today, you do not need to buy a cheap single-storey bungalow overlooking the South China Sea in Kuala Terengganu, so far from civilisation. Because, today, you are earning double the salary we were earning 40 years ago, you can afford to buy a RM380,000 terrace house in Selangor, far from the salty sea air that will rust all the metal in your house, plus rust away your car on top of that.

Can you see how fortunate you are today compared to those of us 40 years ago who could earn only half the salary you are earning today?

As follows is an e-mail I received of a forwarded message. I am still trying to find out who wrote this piece and will credit the writer accordingly once I do find out. Nevertheless, this piece by the unknown writer makes good reading and I thought I would share it with you.


They say curiosity kills the cat. I so hope this particular phrase is not true today because, for the love of God, I am very curious.

The front page of The Star today shows a picture of our PM and a caption saying, "We try our best to help the people. We cannot satisfy everyone". Below that there is a portion showing the changes. The most interesting change is the rebate of RM625 a year for private vehicles with the capacity of below 2000cc.

Just to let you guys know, I was educated in Malaysia, in fact in Sabah, and am not too proud of my achievements as a student but the education provided to me has not failed to provide me with basic counting and thinking abilities. Let’s look at a simple example of how ridiculous this price hike is.

We all know that foreign cars are taxed to protect Proton's interest in the market and the taxes are pretty expensive. The issue is, we can't seem to put sniff out the exact amount taxed because the taxation system is sophisticated that it actually takes into consideration the make of the vehicle, capacity, and many other factors. Instead of confusing ourselves even more lets just take a simple car, which can't be taxed much due to our trade agreements with Japan , and compare how this fuel price hike actually turns out.

As of last month a Toyota Vios would 'cause a damage' of about RM 89,000.

In the international market, a Toyota Vios is about USD 19,000.

USD 19,000 = RM 62,700 (using the indicative rates of USD 1 = RM 3.30).

That makes Malaysian Vios owners pay an extra RM 26,300.

This RM 26,300 should be cost of operations, profit and tax because the transportation costs have been factored in to the USD 19,000.

RM 26,300 or RM 625 per year translates to a Vios being used for 42.08 years.

I do understand that the RM 625 is a rebate given by the government, but it also means that one has to use the Vios for 42.08 years just to make back the amount paid in taxes for the usage of a foreign car. Would anyone use any kind of car for that long?

Now, with these numbers in front of us, does the subsidy sound like a subsidy or does it sound like a penalty? This just seems to be a heavy increment in our daily cost of living as we are not only charged with high car taxes but also with a drastic increase in fuel price.

With all the numbers listed out, I urge all Malaysians to join me in analyzing the situation. Car taxation is government profit, fuel sales is Petronas' (GLC - Government Linked Company) profit, which translates into government profit. The government may ridicule us Malaysians by saying look at the world market and fuel price worldwide. Please, we are Malaysians, we fought of the British, had a international port in the early centuries (Malacca), home to a racially mixed nation and WE ARE NOT STUPID!!!

We know the international rates are above the USD 130/barrel. We understand the fact that the fuel prices are increasing worldwide and we also know that major scientists are still contradicting on why this phenomenon is happening. Some blame Bush and his plunders around the world and some blame climate change and there are others who say petroleum 'wells' are getting scarce.

Again we go back to numbers. One barrel or crude oil is 159 litres. And approximately 46-47% of a barrel of crude oil will turn out to be the fuel that we use in our vehicles.

46% of 159 = 73.14 litres.

And at the current rate of RM 2.70/litre, this constitutes to RM 197.48 of fuel per barrel of crude oil. This is only 46% of the barrel, mind you. There is another 54% that are still refined and traded in the markets. These products include bitumen, kerosene, and natural gases and so many more.

Using the indicative value of RM 3.30 = USD 1 (it is actually RM3.26 today), we get that a barrel of crude oil produces USD 59.84 worth of fuel. And this makes a balance of USD 70.16 that has not been accounted for. In actual fact, we still pay for this as they are charged in the forms of fuel surcharge by airlines and road taxes for the building of road (because they use the tar/bitumen) and many more excuse charging us but let us just leave all that out of our calculations.

USD 59.84 compared to a barrel of crude oil, which is approximately USD 130, turns out to be 46% of a barrel as well. So this is where I got curios. Where is the subsidy if we are paying 46% of the price of a barrel of crude oil when the production of petrol/barrel of crude oil is still only 46%?

Now, the government has a very ugly predicament in front of them. The taxation of foreign cars to protect Proton has been deemed unfair by these calculations and the price of fuel is currently at world market price. So I hope our PM retracts his statement in The Star as it seems like a joke after all these calculations. Who is helped by this move? Not the poor. Not even the rich. Everyone is affected. Cost of living rises and everyone will feel the pinch.

As far as I know, only the politicians who live in Putrajaya and come for their Parliament meetings in Kuala Lumpur (approximately 60+ km) are the ones to gain as they claim their fuel and toll charges from the money of the RAKYAT. It is so disappointing to see this happen time and time again to the Malaysian public, where they are deceived by the propaganda held by the politicians and the controls they have over the press.

By Raja Petra Kamarudin
Dipetik dari laman Malaysia Today

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