Limited Resources Yet Wasted!

The most basic thing in every economy is the limited resources, limited time, limited cash flow, limited natural resources, limited land, and so on. The main reason of an economy fail is because of the partial wastage in the resources. It same goes to the individual, we always have the problem with not enough time, not enough money. The main problem is because we waste most of them is not because we have lesser time compare to the others, everyone have 24 hours per days. Not because you earn lesser than others, on the other ways, you may realize that the more you earn, the poorer you are. Try to compare your financial today and 5 years back.

Let me show an example, our country Malaysia petrol RON 95 price RM1.90 today.

What do you think? It is cheap? It is expensive? Is this price alright with everyone in Malaysia? What will you think the suitable price? RM2.50? RM1.90? RM1.20? Assume the cost of the petrol RON 95 is around RM3.00.

If today I say RM2.50 is the correct price, majority of the Malaysian will spit at me or they will open their mouth big and look at me, are you crazy? If I say RM1.20 everyone will hooray!

Let us think in the point of economy, not on others, RM1.20 is just like giving people fish instead of teach them fishing. Everyone will just buy big car, since it is too cheap on petrol. I will think that will total waste and you will learn that, Malaysia will lose maybe 100 schools, 10 hospitals every years because the subsidy will go all to the petrol not others and many public transport company will close down.

It will not only on country economy, what about our individual financial? It will drive individual to put their limited money into purchases of motor vehicle, pay petrol, toll, car insurance and tax. The worst situation to some people is they do not know how to use their car in their advantage, which will be my next topic. Over subsidy will only give the people temporary good living style, but later in the year, people will need to pay the price. Over subsidy will consequence in the increase of the deficit more and more every years. Subsidy in petrol will cause people waste the limited resources, if you move on the road; you will see that most of the car is only driver alone in the car. We don’t fully utilize the resources that been subsidies to us.

What about the price is RM2.50? Let me put some imagination and assume in this situation. What I can see is maybe 10 universities, 10 hospitals every years and more public transport company will go up. Subsidy should go only to those taxi driver, flight company, and rural area for agricultural purpose so on. Put aside on the effect on the global warming. In a capitalist economy, Government should have minimal control over the private sector, but at the same time government can be a profit organization as well, how? By placing price of petrol RM2.50, people themselves will have to source for others transport to their working place, maybe they will not buying car, they will move closer to their working place, they will take car pool with their colleague, or maybe they will take public transport, it will cause increase in the demand of public transport, let the public transport develop by the private sector, at the same time, it decrease the subsidy amount, decrease government deficit, create more job opportunity in transport industry, let the private sector compete among themselves and focus more on training of the driver attitude, also at the same time increase the income of the government through tax. Subsidy can change channel to subsidies petrol only to the rural area, to develop agricultural industry, basic facility in rural area to increase their quality of life and you will see more private capital will be injected into rural area. In the end, you will see how the structure of petrol subsidy can change not only the economy, also may help in other aspect, like when more job opportunity been offer it will improve the criminal rate, improve the people independent and attract more private capital to develop more resources, especially in Malaysia with a lot of undeveloped land and lack of private capital in manufacturing industry. If those study Malaysia economy crash, simply because our share market is mainly support by the foreign investors, every time the foreign investor pull back the fund, the market will go down, just like what happen for the past 2 weeks.

People will still open their mouth big, saying I am government people. No benefit to individual, let us try to analyst. Individual have 2 main limited resources, time and money. How much time you waste in travelling with our own car every day? Rushing here and there trap in traffic, late for appointment. You have 24 hours a day, for kl people, most of us needed to waste at least 10% to 20% of our time on the road. Every individual in kl is force to buy a car; I use the word FORCE because without car you can’t go a lot of place, correct? Now decrease the subsidy might force you to move closer to your working place, but it force you to save more money. If we have a good public transport that can easily access to all area, will you still want to buy a car? Will you still need to buy a car for yourself, another for your wife, another for your son? Need to worry about car stolen, car parking, insurance, tax, petrol, toll and services? Maybe you just need a family car, instead of each person a car. How much money do you think you will save from this scenario? With the money you have you can have your own investment in share market, property, and live style. Again when this money goes back to the market on the capitalization purpose or purchasing power, it will have direct impact on our income and life style.

Whole mindset of the subsidy needs to be change, thinking in the others angle can change the nation. Focus more on our limited resources, stop wasting government subsidy can be one of our contributions to the country “since we can’t change the government decisions”. Above note is basically my idea, do not compare or debate it with any politician in our country.