The ever increasing oil price is potentially the biggest factor for a reigning government to collapse. This prediction is solely based upon people's response from many places around this globe, particularly from 3rd world countries such as India, Malaysia and Indonesia. Fuelled with income inequality, lack understanding of economy and of course act of bravado against governments will lead to chaos and that sort of thing. The recent price increment with the new subsidization schemes by Malaysian government has left many negative impressions towards the ruling party albeit many measures taken to compensate the effect. In the time of instability there will be a group who rises to advocate 'socialism' and this is obvious with the trends of 'public is first' which undoubtedly the best placebo to cure anxiety of the people. Let’s have 'free water' some say and let’s cut 10% of allowances some say. The other groups say let us take charge and that one guy says let me become the prime minister. Oddly enough socialism is not without greed for power. In short too much politics drive many of us crazy. On the bright side, people now have changed to be more aware of their constitutional rights. But without right guidance, the rights will be abused and driven by emotion and political rhetoric.
We live in capitalist world. Every property is owned either individuals or corporations. The economy is largely decided by market forces namely demand and supply. Demand and supply are two words representing only one entity. They must co-exist without a doubt otherwise there is no such thing as 'market'. As far as oil is concerned, many factors have led its price to soar. Firstly the increase of world demand particular from developing nations such as China and India. Second factor is supply which is influenced by the fact that the oil reserve is diminishing. Extraction of new oil wells are feasible but with a colossal cost. As a a future surveyor myself, the seismic survey for oil exploration itself would cost a fortune and yet the there is not guarantee for oil to be found. That is the risk in oil exploration, though it may be found but it is more than 1000 m below your surveying vessel. The cost of the whole extraction process is not that much probably half a billion. Now we are only talking about setting up an oil rig. Therefore, not many companies would dare to do such investments. Current oil wells around the world are diminishing in numbers but the rate of exploration for new wells is quite slow mainly because of the cost. Apart from that, the unpredictable situation in Middle East more or less has decrease the supply to the world. Other factors are speculation and natural disasters. Oil price increment has been in the spotlight since 2003 and it was one hot topic in my economic class in 2005. We do not want to heed the issue because it has yet to affect us. Now it happens with a rocketing price.
The price is inevitably going to increase. That is the fact. The trend of course in economics term is going to stop when it reaches equilibrium. In other words supply = demand. When? Only god knows. Many countries have badly affected including our beloved Malaysia. If we put things into perspective, is the government solely to be blamed? I do not think so. Yes it is burdening the people and failing the hope of many but how long the government will able to sustain with ever increasing subsidy. 50 years of independence is perceived short span of time to create a great civilization but we have such aspiration to be among the greats. Before 1997, we were called Asian tiger along Singapore, Korea and Taiwan. We were unlucky after that.Asian Economic Crisis. We did survive the test but very slow at regaining our pace as before 1997. Until now we never regained the pace. The economy is not as strong as before. But developments are still there regardless. Thanks to Private Finance Initiative (PFI). Thanks for giving the conveniences to the people in short term but in long term with unpredictable economy, it is a risky business. Politically and economically. As we or some of us know all the 'lebuhraya bertol' are owned by private companies. North-south by PLUS, Lingkaran Tengah by Elite and to be named a few. These companies on the positive side assist the government to develop highways for the people but with something in return. Concession as we would say. They have the right to collect toll for span of time normally until the cost recovered plus with some profits. The government has no power to change the price as it is already inscribed in any PFI contracts. Price of tolls is always an issue. Indeed it is an issue but this is the price of rapid development. Politically, the government becomes unpopular when people have to pay more of what they ready to pay. I remembered when Dr Steve Scott in Professional Practice class said that there is one country which has suffered due to rampant PFI projects. He did not want to disclose but to me Malaysia was 8o% the right answer.Issue of toll is never ending. One of the worst hit PFI projects in UK is Channel Tunnel crossing the English Channel. As Dr Scott said, "Who would be able to predict that now we can fly to Paris with 50 pounds worth of an air ticket?". Well thanks to Easyjet, Jet2com and Ryanair. It was expected then that ground transportations will be the cheapest way to Europe. Who can predict travel with planes is cheaper nowadays. Everyone can fly says AirAsia. Until now the cost of the whole project is not yet recovered. It is one of Seven Wonders of Modern World to say the least but not without $12 billion. The figure could be tripled now considering value of money keep changing in time. Net Present Value (NPV) was the topic that really enlightened me about the change value of money over time. The value of RM 10 last 20 years ago is now RM 100 due to interest rate. It makes wonder with appreciation how Islam tells us not to have interest in the economic systems. Had not interest exist the value of money will be the same.
The government has no absolute control of economy because part of it is controlled by private sectors . We never had been an empire like British who obtained the wealth from its colonies. We improvised what was left. Thanks for nothing to Brits. I would say we progress through well structured debt. That is good practice of economy as if you are taking loan to do a business and payback with the yields. We never had enough cash. We paid the purchase of Su-30 MkM by partly using palm oils. Not cool eh?. That is the fact. Developments do not portray the cash that government has but to show good practice of economy.To portray good cashflow in the economy. Though all is not perfect but at least we never went down beyond repair. Therefore, what do you expect when 1/3 of GNP is used to subsidize the oil. Emphatically, it is very burdening for some people. I still think there are better options to tackle the oil price hike. Peace demonstration is fine with me but how far you could go with it. Yes it is noble to fight for the people but how it can be so noble when it is all political motivated. Not quite my friend.
We walk with crutches is quite the same meaning with we live with subsidy. Yes it is the responsibility of a government to pacify its people. But the disadvantage is that it creates a comfort zone. People tend to be dependent and blaming others for their shortcomings. Face the fact that sooner or later price of everything will go up. Rather than find ways bashing others for no good reasons lets find ways how to survive in looming global recession and inflation. If we are independent financially, i do not think it bothers us much who is in control of the government. Stop moaning and let us be prepared for unpredictable local and global economy. Besides let us be clear about the purpose of living as well. It seems to me we concern much on the financial loss and gain but very little attention on how much knowledge can we obtain in our life. It is good to know and it feels good to be knowledgeable. Accusations, allegations and rumours are at their best now. Knowledge is power enough to parry negative inputs and to sieve unwanted elements. Seek knowledge. Educate ourselves.
Jabir Ibn ‘Abd Allah narrated, the Messenger of Allah (SAAW) said:
“People are of different substances, the best of them in the Jahiliyah (A
state of ignorance), are the best in Islam, if they gain ‘ilm (knowledge).”
(Ahmad Ibn Hanbal)
