Saturday, July 17, 2010

Koh Tsu Koon Lives in Parallel Dimension?

The Government yesterday launched a surprise “5-in-1” price hike programme, raising the prices of RON95 and RON97 petrol, diesel, white sugar and liquified petroluem gas (LPG) including cooking gas cyclinders by at least 2.8% and as much as 15.2%. In fact for white sugar prices, inclusive of a 20 sen hike in January on top of the current 25 sen hike, prices have increased by more than 31% this year alone.

It is hence shocking to hear the Prime Minister, Datuk Seri Najib Abdul Razak, supported by the Performance & Management Delivery Unit (Pemandu) claim in their subsidy rationalisation fact sheet that the price increases will have “minimal impact” on households in Malaysia.

In the fact sheet, it's “demonstrated” that the new teh tarik price taking into the impact of subsidy reduction of fuel and upward price adjustment would be around RM1.0155, or an increase of less than 2 sen.

The impact on other popular items such as roti canai was stated as being 0.24 sen per piece, 0.6 sen for rice, 6.3 sen for meat per kg and 1.05 sen for mee goreng.

Pemandu under the chairmanship of the Minister in Prime Minister's Department Senator Tan Sri Koh Tsu Koon must be living in a parallel universe for having the audacity to publish such numbers which are at best applicable only in a fictitious and theoretical universe, and at worse, showing the complete lack of understanding of real world market dynamics on the price of goods and services.

I challenge Tan Sri Koh Tsu Koon to find me a mamak stall in Malaysia which will increase the price of teh tarik by a mere 1.55 sen or the price of roti canai by a minute 0.24 sen in the entire country to prove the “minimal impact” of the latest round of 5-in-1 price increase.

Even anecdotal evidence of the previous price hikes have clearly demonstrated that prices will increase by a percentage much larger than the theoretical impact of the price hikes because of an real-world imperfect market. What's more, when the prices of fuel actually decreased subsequently, the inflated prices never returned to its previous levels.

The government should instead stop spewing these ridiculous and out-of-these-world hypothetical data but instead demonstrate how the Government will not only seek to trim the subsidies which affects the rakyat directly, but also the wasteful expenditure and subsidies to crony companies as well as clamping down on corruption which will have a much larger impact on government finances.


Anonymous said...

Its ridiculous to give out the fact sheet without the model behind it. All models are approximations and they are complex.

If I were to do it, it would either be on econometric basis or it would have to be dynamic pricing model. Do KTK even remember what they are from his Princeton's day or his corruption has basically shamed his Alta mater.

The only way they could have come to the conclusion they have is simple static linear independent variable I/O model i.e., the assume that all variables are static, independent, linear in relationship and just plug it in a spreadsheet. Its the most dumb model you can design. Real world don't work that way, not even close.

Its amazing how simplistic these people thing these decisions should be based on and basically they don't care what the smartest people out there think because they figured most people are just dumb.

niakong said...

Of course one will not feel the pinch when he is also living in a RM4billion per annum dept.

Anonymous said...

If KTK stood firm on many issues facing the people of Penang, Gerakan would be wiped off at the GE12. Have they learned from the 308 political tsunami?

Anonymous said...

Wah! The poverty thresholdl will have to be adjusted to RM3,000 per month per household!

Anonymous said...

Koh Tsu Koon's profession is to write fictions. All these economic reports are just pure fictions.

Anonymous said...

Seriously, those 2 idiots think we are idiots to buy their theory for price hikes.

How idiotic do this politicians think we Malaysian are nowadays? It's the new era! I suggest that take a whiff of smelling salts and wake the hell up.

Lady nene--

Anonymous said...

I think increase in price is unavoidable. The question is how soon and to what extend. If we want to enjoy the benefit of globalization, we will have to do away with subsidy economy, because when human moving cross countries with high mobility, we cannot identify who we are subsidizing and how much we have subsidized. But looking at the quantum the government increase the price, it is either the current government is not performing, or if they are performing, they must be clearing the shit left by previous government. Anyway to avoid price hike is through high productivity that finally increase the value of MYR, but looking at our country today, this method is almost hopeless.