Harga Minyak Malaysia

Asslamualaikum,

As you guys know, the price of petroleum in Malaysia is controlled by the government. At USD 100 per barrel, the cost of the subsidy for petroleum reaches as much as RM 40 billion if i am not mistaken. This method of subsidy is actually, not very effective. People smuggle these control products through the borders for profound profit. (For those that are ridiculously irresponsible).

I am not sure about what others think. These are some thoughts from me in my oppinion:

1. Malaysia produces petroleum. The price of petroleum products in Malaysia, then should not be affected by the international price except for the exported ones. At least, currently.

2. The price of petroleum products in Malaysia should NOT be subsidized. This will of course increase the cost of living of Malaysian absurdly. However, the government has saved more than RM 40 Billion. This can then be used to increase the salary of the government workers. How about private companies? They need to increase their workers’ salaries too. So, cost of operation will increase tremendously. Price quotation for contracts then will need to increase, too. And with the RM40 billion. Probably, that will be enough for the government to handle that. Somebody else who can do the math. I’m not eager enough to do it. Cost of living will increase, no doubt about it.

But remember, the payroll should have some significant increment with it. This IMO is better than price control which later is abused by some people.

3. For people who do not earn anything. This will be hard pressing for them. Those, who can actually work, should do so and earn something. For those who can’t, they are the unfortunate and should be helped by those who are fortunate.

Distributive justice.

Another positive consequences of this is:

Imported products which are not affected by the increasing overhead cost except for just a little caused by  distribution and stuff will seem cheaper.

Okay, now the reality. I thought about this in like some free time and as i am not an economist or anything as such, I would love to know the bad consequences of this. Please, let me know. It seems ridiculous but i did think about it and i need some feedback. Please feel free to comment. Please.