ePetrol solution for fuel subsidy

Eddy said:

Simple and nice solution to our "problem".

Technologically, it should works. The concept is straigthforward, every member in the population uses MyKad. Every MyKad has a subsidy limit. And every limit is being monitored and controlled. What could goes wrong?

Put it in another perspective about our subsidy "problem" at individual level.

Why and how an individual consumes petrol?

1. Transportation to work
Eventual outcome of this is increase in GDP. The country is in better productivity if GDP is high.

2. Travelling to destination
Eventual outcome of this is increase in spending. Higher individual spending means better flow of money supply in the market

3. Drives luxury car that "drinks" petrol
First and foremost, if the individual can afford to buy that class of car, means that the individual most probably contributes relatively more productivity than others, thus he/she earns higher wages that afford him to buy the car. They pays higher marginal tax rate. Banks make money from them by charging interests from hire purchase loans.

The conclusion is most individuals consume petrol in a way that drives the country's economy. My ideology is an individual must not be forbid the rights to entitle for equal amount of benefits given their relative percentage of contribution to the overall economy. That's my thinking.

What I'm afraid is the final subsidy structure doesn't fulfill the actual petrol usages. Poor people get poorer.

Then.. what about businesses? Total removal of subsidies from their operations? Cost of doing business shall be higher, profit margin reduced, taxable amount decreased, thus this lead to cutting down product supply, maybe higher unemployment, leading to shifting of long run market equilibrium to significantly higher product prices.

I see Inflation Boom. Poor people do get poorer.

I agreed with the finale of open up the market to natural supply and demand forces.

But I believed that Malaysia is still a developing nation with reasons. Fundamentally we are a Sultanate country, and there is nothing wrong that our beloved Sultan subsidizing his people with the natural resources of the land.

Corruptions must be severely published.

Beats Capitalism.

ePetrol solution for fuel subsidy
Stories By ELAINE ANG


USING the MyKad at the petrol kiosk could become a reality soon if ePetrol Holdings Sdn Bhd's fuel subsidy management solution is used to revamp the country's fuel subsidy scheme.

ePetrol Holdings, established in 2003, is led by a team of industry experts and leaders from the oil and gas, payment, banking and smart-card industries.


Jeff Perera demonstrating how the ePetrol system works.

Executive vice-president Jeff Perera said the ePetrol system – with debit, credit or prepaid payment services – would enable the MyKad to be used to pay for fuel purchases at petrol stations nationwide.

“There is no necessity to carry another card to enjoy any fuel subsidy as all Malaysians carry a MyKad with identification and payment capabilities,” he told StarBiz at the World Congress on Information Technology 2008 (WCIT) in Kuala Lumpur recently.

Perera said the ePetrol fuel subsidy management module was an integrated and centralised purchasing and payment system between consumers, oil companies, banks and the Government.

“The platform has the capability and flexibility to accept any set of rules to effectively monitor, manage and control fuel subsidies down to the individual consumer level,” he said.

The benefits of the system include:

·Automatically identifying consumers entitled to fuel subsidies;

·Managing the amount of subsidies to be allocated to each consumer;

·Controlling the frequency of the subsidy to be provided – weekly, monthly and so forth; and

·Managing how the subsidy is provided (in a lump sum or as a percentage of the purchase).

The ePetrol system, which was showcased by the Multimedia Development Corp and National Registration Department at the WCIT, garnered much attention from the public.

Even Prime Minister Datuk Seri Abdullah Ahmad Badawi was said to be suitably impressed when shown a short demonstration of the system by ePetrol Holdings' owners, RHB Group founder Tan Sri Rashid Hussain and Dialog Group Bhd chairman and group managing director Ngau Boon Keat, when he visited the booth.

Perera said the system would enable the Government to lift price controls and let market forces determine the pump price of fuel and still be able to selectively provide fuel subsidy benefits only to deserving consumers.

As the scheme benefited only MyKad-holders, subsidies for non-Malaysians and cross-border fuel smuggling would also be reduced, he added.

“This can result in potential savings of billions of ringgit per annum, which can be channelled toward generating greater economic growth and development,” he said.

In fact, Domestic Trade and Consumer Affairs Minister Shahrir Samad was quoted in a recent report that subsidised fuel in the future could be available only to Malaysians carrying their microchip-based national identity cards.

Moreover, Perera said, multinational oil companies had endorsed the system as technologically compatible with their retail station information technology systems; thus no additional substantial capital investment would be necessary.

“The ePetrol system is now available and ready to go. It can be deployed countrywide to consumers as they already carry a MyKad.

“We will undertake all technology, infrastructure and development investments. Therefore, no Government funding is needed,” he said.

The subsidy management scheme could also be extended to other controlled items such as natural gas, liquefied petroleum gas, cooking oil, rice, flour and sugar.

An industry expert pointed out that the restructuring of the fuel subsidy system must be done to improve the social economic welfare of the rakyat.

“That should be its main aim; otherwise it defeats the purpose. The ePetrol system looks like a practical and efficient system, but whether it will work to expectations is left to be seen.

“If the ePetrol system is chosen, the onus is on the Government to come up with a great set of criteria that ensures the right group of people get the right amount of subsidies as well as plug leakages and wastage,” he said.

He added that the ePetrol system would also help boost the usage of the MyKad, deemed a half-a-billion ringgit white elephant as it has not lived up to its potential in terms of multi-purpose usage.

Besides the MyKad solution, the Government is said to be considering a proposal to replace the existing octane ratings of petrol – research octane number (RON) 92 and 97 – with RON 95 and 99.

The Government would then allocate most of the subsidy into the RON 95 used by the lower to medium-income groups while those with high-performance and luxury cars can opt for the more expensive and less-subsidised RON99 fuel.

Another proposal is the fleet card approach which involves issuing authorised cards for vehicle owners from lower income groups.

Eligible citizens who hold the fleet card can fill their vehicles with subsidised fuel. Higher-income citizens would pay rates that more closely reflect market prices.