March 3, 2006

1,001 Nights of Petrol Stories & Malaysian Economy!

I was forwarded with this notice from a friend in Petronas:

Kami telah dimaklumkan bahawa satu perhimpunan akan diadakan di Kuala Lumpur City Centre (KLCC) tengahari ini. Sebagai langkah keselamatan, perimeter KLCC akan diawasi oleh pihak Polis dari jam 1.30 petang hingga 3 petang.

Kakitangan PETRONAS dinasihatkan supaya berwaspada dan meneruskan tugas harian di pejabat seperti biasa. Kakitangan PETRONAS dilarang dari menyertai perhimpunan ini dalam apa bentuk sekali pun.

Bahagian Keselamatan Korporat
3 Mac 2006

(In English:

We were informed that a gathering will be held in KLCC, in the afternoon. For safety reasons, KLCC would be surrounded by the Police from 1.30PM to 3PM.

Petronas employees are advised to be careful and to proceed with your duties as usual. PETRONAS employees are strictly prohibited from joining the parties in any kind of form and action.

Corporate Security Dept.
3 March 2006)

As I said, the issue would be a never ending story. The latest effort of the government to overcome the problem is to ask the folks to lessen their spending. That is so terrible. For those who can still remember the steps taken by Tun Dr. Nahathir bin Mohamad in 1997-1998 recession, this time, it's a total backward and contrary steps is being taken.

What the government was trying to do was to make the people to regard this economical problem as nothing. For some people, especially the government servants and those who had been employed, the economical problem is something that has got nothing to do with their business. They can still spend their money, because their income would never be reduced at all.

What about those who were doing business which would involve transportations? Of course they cannot raise the price as easy as that due to the raise of the petrol price. Some more, the government is now persuading the people to reduce their spending in order to cope up with the petrol price.

As someone who has been watching the economical scenario since 1997's recession, there are a few contradicting actions were done or let be done by the government:
  1. The increasing interest rate for car loans. (Waja from 2.55% to now 4.1%)
  2. Reporting the economy situation/condition as good, as it shouldn't be done like that
  3. Cancelling most of the mega projects.
  4. Letting so much of political conflict of interest to be happening amongs the politicians.
  5. Too much of a policy change, which involve the change of the responsible people, instead of continuing the current policy. (This is due to the changing of the prime minister as well)
  6. I would see the change of the prime minister a few years back is not suitable as we have a lot of economical issues to be taken cared of.
  7. The recent petrol price increase.
Ok, coming is why I say these changes are not good for the country.

Do you know that Proton/Perodua cars is being taxed at 50%?

For the first problem, I cannot see why they would increase the interest rate. As we all can see, that our country is a car manufacturing country. Yes, I would agree that they put high taxes and duties to the imported cars but why do the same thing to the local cars? The government is already taxing Proton and Perodua on their profit but why should they taxed and dutied the buyer on the sales? The government is also taxing the bank profit that is made out of the loan interest that we pay.

Furthermore, the interest rate of the loans of the imported cars are much lower than local cars. Proton cars 4% and above while BMW/Mercedesz/Volvo 2% and above. Honda is making it's own initiative to loan out money for people to buy their car at the interest rate of 1-2% but thei car is still considered as expensive.

Maybe there are some economical reason to it, as actually the lower amount of loans would contribute to lower profit so that's why they increase the interest rate so it would become even. But I don't see it that way.

With lower interest rate, people can afford to pay their loans, at the same time producing a lot of performing loans that will contribute to the performance of the bank. As easy as that.

Furthermore, those rich people applied for loan just for the purpose of avoiding the tax if they buy the car by cash. Normally after 6 months, they'll settle the balance of the loan. Don't u think that by providing loan with lower interest rate to them is actually helping them? And why should u squeeze the poor who is already poor to pay the ridiculous amount of money? Pity them.

To persuade people to buy local cars, not only tax should be reduced or eliminated, the interest rate should be as well lower as possible.

From buying a car, these are the items that the govt. is profiting from:-
  1. Sales tax (50%) (for example GTI price is RM77k, Actual price is 51.3k, so the tax is RM25.6k
  2. Proton profit of the sale, out of 51.3k, the profit was 5k, so the profit of 25% is RM1.25k.
  3. Road Tax of (estimated) RM187.
  4. Insurance Tax 15% estimated at 15% x RM2048 = 307.20.
  5. Consider 9 years of loan with the interest rate of 4.1%, with the 90% loan of the value RM69.3k, the profit from the interest rate of 4.1% per year is 36.9% out of RM69.3k, which a total of RM25.5717k. (Buyer pays a total of RM94.8717k to the bank actually!) Govt. gain (estimated at 18% of RM25.5717k) which is RM4602.91, divide by 9 years is RM511.44
Govt gain a total of RM27668.64 for each Satria GTi you buy! Not to mention if u buy a Mercedesz or BMW!

So every year, estimated more than 140,000 new cars being sold. Not to mention the 2nd hand cars! Consider each car govt would gain at least 20k, multiply by 140,000 is RM2,800,000,000 that is RM2.8 billion a year at least! What if people bought cars worth more than RM100k? What about RM 1mil cars?

We haven't considered the 2nd hand cars transactions as well!

See the govt. gained a lot in every single thing we do. Increasing the interest rate of the local car will actually kill the local industry. Actually, in reality, the govt has lost a lot from the people who failed to pay their car loans, migh as well as the banks which cannot get any profit from the money they loaned out. They intend to gain more, but in the end, they lose more!

In other aspect, it makes the rich richer, and the poor poorer. In order for our country's economy to move on, we should support the local car industry!

Suggestion ::
  1. Lower the interest rate for cheaper cars/lower cars.
  2. Reduce/eliminate tax for local cars.
  3. Give more incentive to local car owners.

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