Petrol Subsidy & Foreigners

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hi,

There have been a couple of articles in The Sun (articles not available online) about changes to the cost of petrol and diesel. The articles have been about which system a reduced subsidy will operate under.

Under any system, foreigners get to pay more.

Here's a few paragraphs from the latest article (The Sun December 1:7, 2009) :

Foreigners will have to fork out the full market price at the fuel pump from May 1st 2010 as petrol subsidies will be reserved for Malaysians under a control system that used the MyKad, Minister of Domestic Trade, Co-operatives and Consumerism said yesterday.

The Minister did not give details on how the system will work. "From May 1st, there will be no limit on how much fuel foreigners can buy. However, they will not pay the price reserved for Malaysians," he said.

The minister aid the government did not set a target for savings from the current fuel cap imposed on foreign cars at border regions, but did it to curb smuggling.

The government recently introduced a fuel cap of 20 litres for foreign cars at the Thailand border areas. There's really not much need for a fuel cap down south (Singapore) as all Singaporean cars are required to have a fuel gauge showing 3/4 tank full. And who is going to use 3/4's of a tank just driving around Johor Baru.

However, no-where in any of these reports does it explain if the reduced fuel subsidy, and therefore higher petrol and diesel prices, will affect all foreigners irrespective of border areas or not. If a fuel price reserved for Malaysians only is going to be applied via MyKad, which we don't have, then we'll all have to pay the full market price.

An earlier The Sun article from a couple of days ago estimated that Ron95 would go up from the current RM1.80 to about RM3.30. 

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What does the Malaysian govt. mean by foreigners not getting the subsidy - the foreign car or the foreigner driving the hired car or mm2homer's car ?

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hi,

The article in today's The Sun had the minister of Domestic Trade, Co-operatives and Consumerism saying, "By right , they (the foreigners) should not be buying it (subsidised fuel) at all."

I think, in the context of the recent 20 litre limit, that he's referring to Thais crossing the northern border, filling up and selling the fuel cheaper in Thailand. It seems to be about smuggling.

"Smuggling was happening openly and it was uncontrollable, so this is why we put in the 20-litre limit. But I believe the savings will be high,' he said (the Minister).

However from May 1st there's this MyKad control system. It hasn't been worked-out yet. Some previous media articles have speculated that a fuel purchase will be off-set by a credit stored on the MyKad.

I don't have a MyKad, I don't even have a MM2H ID card - they're still suspended due to technical problems. It's been several months now.

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Well that's not very nice, is it.

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Sounds reasonable, I don't pay income tax nor VAT here in Malaysia so it seems a bit strange that I should benefit from subsidies.
On the other hand if this system will take place I bet there will be a lot of Malaysian "friends" at the pump station who want lend out their MyKad (for a small fee) 

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I won't be paying tax as well since my income is from Uk. But if Malaysian govt, is tying down my RM150,000(for whatever reason) I expect some benefit, besides tax free locally assembled car.
BTW, I'm not a fully pledged mm2h yet

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I expect some benefit, besides tax free locally assembled car.

What about a 10 year visa?

What's behind is that the Malaysian government as a lot of other governments in other countries is struggling whit a big hole in their budget. In the Netherlands they are to fight this raising the retirement age from 65 to 67. In Malaysia they are looking at fuel subsidies.

We can all blame the bankers

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I see this move as an ordinary tax for foreigners. From my point of view I do not mind, because I don't pay any income tax.
But I think we are fooled by this so-called subsidised petrol. It is all about playing with economics.

Malaysia is an oil producer, if they don't use their oil for their own people, they can sell it to foreign countries for a much higher price.
The government is not actually subsidizing, what they mean is if we sell our petrol to foreign countries then we can get a higher price than at our own market.

Some statistics:
Malaysia produces about 600,000 barrels of crude oil per day.
Of this crude volume, 339,000 barrels are refined locally for local consumption. The rest is exported (and because it has lower sulphur content it fetches higher prices).
Malaysia also imports about 230,000 barrels of crude oil per day, mainly from the Middle East, to be refined here.
This crude oil contains higher sulphur and is less expensive (so the country gains more by exporting their own crudes).
In FY2009 PETRONAS made a pre-tax profit of RM89 billion. The amount given back to the Government was RM67 billion.
(see http://biz.thestar.com.my/news/story.asp?file=/2009/6/26/business/4198627&sec=business)

In the US today's price per liter is $ 2,55 per gallon, incl. 16% tax. So market price is Euro 0,39 per liter or RM 1,94
This comes very close to the price at the pump in Malaysia. So who is kidding who?

b.t.w. the fight in Holland is not over yet about getting retired at 67.

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b.t.w. the fight in Holland is not over yet about getting retired at 67.

Formally you are right, but this week even the labour unions declared not to fight it anymore so I think it's just a matter of time.

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I posted this some time ago when it was announced in Budget 2010:

In January 2008 crude oil was about $100 a barrel. According to this (http://biz.thestar.com.my/news/story.asp?file=/2008/1/14/business/19952483&sec=business) article the actual market price at that time was estimated at RM3.5 per litre. Price at the gasstation in January 2008 was RM 1.92
Now oil is at $80 a barrel 20% less so market price should be around 80% of RM 3.5 = RM2.8? Current price at the gasstation is RM 1.8

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hi,

On the purely technical aspects of a MyKad system here's a link :

November 22, 2009 : Archive for Malaysian Fuel Prices
MyKad for Petrol Purchases, and ePetrol for fuel subsidy management.
http//paultan.org/topics/malaysian-fuel-prices/

This article (it's the 2nd on the page) gives the poor quality of MyKads as a problem area. It doesn't list privacy as a problem which to me it is. In order to get a discounted price for the fuel the MyKad needs to be read and a rebate credited, or fuel dispensed at a low price. And there's going to be a record of the MyKad owner, the petrol station, the amount of fuel, the day, year and time.

Singapore's own MRT system used a similar "discount for information" system in updating swipe cards. Get your IC details listed with SMRT and you'll get a Transitlink card at a cheaper rate.

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hi,

It is all about playing with economics. Malaysia is an oil producer, if they don't use their oil for their own people, they can sell it to foreign countries for a much higher price.

Playing with economics is a very good way of putting it. Malaysia has got itself stuck with several subsidies, anti-speculative and/or engineered PR, (fuel, electricity, and controlled items such as rice, sugar, chicken) and a very large deficit.

This quote is from REUTERS NEWS SERVICE , dated June 10, 2009, on  "Malaysia deficit worries spur Fitch to cut rating."

"By 2010, Malaysia's general government primary deficit of minus 6.4 percent of gross domestic product will be amongst the worst in all Fitch-rated sovereigns after only Latvia, Bahrain, Ireland and Vietnam," Fitch said.

Malaysia has been running steadily increasing budget deficits in recent years. Fitch said the ratio of Malaysia's government revenue to GDP was 21.6%, lower than the 10-year average of 35% for its peers, and that the ratio will worsen to 19% by 2010.

Malaysia is dependent on oil, and there is little chance the country's unpopular government will widen the revenue, Fitch said. The next elections are due by 2013.

The recent introduction of RON95 at the same previous price for RON97, and the 20% increase in RON97 prices, meant a price increase for all, and profit for the government and the oil companies.

Several newspaper reports have speculated that the MyKad discount would be about RM50 per month. Raise the petrol price to RM3.00 (this is my guesswork, not a fact) for all, and allow Malaysians a RM50 per month. Loadsmorecash to offset the deficit and the stimulus packages.

Add-in GST (July 2011), and RPGT, and it all helps. In today's The Star there was a report on the Chief Minister of Penang saying that GST would bring RM67B for the government, not RM11B as newspapers have reported.

I guess Malaysia will move from very cheap to merely cheap. If fuel gets too much I'll just sit in the old merc in the driveway.

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hi,

The current limit of 20 litres is for non-Malaysian registered cars. It seems to be a stop-gap measure aimed at Thais crossing into Malaysia to fill their tanks.  I can recall this issue appearing in the newpapers for the past 2 or 3 years. Suddenly there's action.

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6.4% defict? Greece has 13% and is sinking the Euro

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Sounds like something from Yes Minister but the letter below from the Star makes a good point.

I WOULD like to ask the authorities how they hope to enforce the maximum of 20 litres ruling on foreign vehicles leaving Malaysia.

Singapore automobiles must, according to their laws, have at least two-thirds of their petrol tank filled when leaving the country.

My auto holds 70+ litres, so that would mean I would have to have at least 45 litres.

There is a visual inspection at the exit point, either at the Causeway or the second crossing (Tuas).

I know from experience and talking to Singaporean friends that most of them “top up” to be safe in meeting this rule.

Say, for the sake of argument, a family comes over to Malaysia for shopping and then a meal in Johor Baru only. At most they would have used five or six litres, maybe even 10 litres before going home.

First, can you imagine the backup of vehicles at the Causeway on a Saturday evening, with all Singapore vehicles being subjected to a visual inspection of their fuel gauge?

Second, if the family described above has only been in Johor Baru, they would for sure not have burned up enough fuel to meet the maximum of 20 litres rule.

They have spent tourist money in our country, and now we are going to punish them for not driving enough to burn up the necessary amount of petrol to meet the new rule. Sounds stupid and unfair to our neighbours to me.

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Perhaps Johor could establish a ring road where Singaporeans could go round and round and round while they burn off the required fuel. Wait of course there will be a form that will answer all. What colour will this one be??