Wu Qi Cong (translated name)

China Press, 02-10-2014

Petrol price increased again by 20 sen!

Sugar mill boss said “Petrol price increased, transport cost also increased so sugar should increase by 20 sen per kg.”

Coffee shop proprietor said “Sugar has increased in price, cost for drinks also increased so every cup of coffee increased by 30 sen.”

Mee stall operator said “Coffee increased by 30 sen, my wantan mee also increased by 50 sen.”

Business people said “Since everybody increases their pricing,what a waste if I do not take the opportunity. We shall increase by RM1.00,RM10.00, RM100…”

The consumer said “How can you increase the price at your fancy?”

All bosses answered “Do not blame us. Blame the government.”

The government said “The price of petrol increased by only 20 cents…”

The scariest thought is not the increase in oil price itself but the attitude of unscrupulous traders who used this readily available excuse to increase the prices of their goods at their whims. This method of increasing prices exceeded the basic cost of the product and it links to other factors and amplifies the rate of increasing prices. Eventually it causes inflation due to the butterfly effect.

The increase in petrol price agitated the Rakyat

The increase in petrol price is regarded as a stupid move as it can only help the government to cut down some of the petrol subsidies. Eventually the government has to pay for the consequences due to the butterfly effect from the petrol price hike which annoyed the Rakyat. When the next general election is around the corner, the government has to pay for sky high propaganda costs to pacify the Rakyat. Hence would the government save any cost?

The government can give numerous excuses for the price increase in petrol like now we are a petrol importer country and the price of petrol at the international market is going high. All these excuses will not be accepted by the Rakyat. The Government did not set up any agency to monitor the butterfly effect due to rising oil price. Once inflation is out of control, the livelihood of the Rakyat will be miserable.

Removing the fuel subsidy is a circumstantial factor which will happen any time. I personally hope that the government will once and for all remove this subsidy completely. This is to prevent unscrupulous traders from taking the opportunity to impose a price hike whenever there is a rise in petrol price and it causes inflation due the butterfly effect.

Talking about inflation, it really puzzled me. The free market mechanism in Malaysia seems to be redundant. In a free market mechanism, a consumer will go for alternative products whereby the price and quality are compatible. If the products are too expensive or of inferior quality, the products will be phased off. In Malaysia the free market mechanism responded differently. Once some traders increase the price, the others will soon follow and eventually forcing the consumers to pay at a higher price.

As a businessman, one can overcome inflation through price mechanism but for a wage earner, he or she is not that lucky to increase his or her wages from time to time to offset inflation. The government seems to be short sighted about the butterfly effect on the recent 20 sen increase in the price of petrol.

Original Source: 漲油價的蝴蝶效應: 吳啟聰.