November Prediction of Pump Oil Price (Ron 95)

**It is easier to predict the direction of fuel price than to estimate amount of swing of fuel price due to the government REFUSING to disclose the compute mechanism.**

This is the fifth time I'm posting my prediction in a blog posting. Please bare that I will repeat some lines for new readers :) Also I always care to post my predictions before any official news or other analysts have given their views (typically too late after the queue starts at the stations).

Why is this sort of important? Say every month you know ahead of official price announcement and let's assume there is a price swing on average of 10 sen per month and you can fill in 35 litres. 0.10 x 35 x 12 = RM 42 savings a year. Obviously you don't feel it's a lot but every year you will always call and beg for credit card waiver of RM50 on govt service charge? Ironic isn't it? :)

Nov 2015

Global oil price has edged up slightly above $50. The avg price for Tapis crude oil for Sept was $49.68, while Oct it is hovering at $51.16 and is somewhat consistently above $50. Just moments ago crude oil gained 5.23% after EIA's (US Energy Information Administration) reports 3.4 million barrel rise in crude supplies.

MYR took a breather in October - largely due to USD being shorted after the FED decided not to raise interest rate, thus myr strengthen from a high of 4.40 to 4.15 (avg of 4.30) but has since pulled back to 4.25 levels lately. Malaysia continues to suffer from a crisis of confidence and political uncertainty, also Budget 2016 has not reveal any catalyst to bring MYR back to less than 4 to the Dollar. Even Moody's has the same thought: Moody's Says Budget 2016 'Tame'.

Domestically we received a "Kerja Bodoh" budget that is delivering so little with every corner being cut. I've talked about this in my previous post (just 2 days ago): Budget 2016: Ini Kerja Bodoh. Other than that I don't see anything interesting until the end of the year when global markets are usually more quiet during the festive season (Thanksgiving and Christmas).

Some asked why the price of crude oil has dropped in 2015?

- Strong US dollar; all commodities are priced in dollar and that includes oil.

- Organization of Petroleum Exporting Countries (OPEC); refuses to cut production in order to maintain market share.

- Oversupply of crude oil; thanks largely to US shale oil producers which is now the world's biggest swing producers.

- Declining demand; world's no.2 economy China is slowing.

- Iran nuclear deal; removes Western sanctions and thus allowing country to export oil once again.

How come our pump fuel price did not drastically drop in 2015? 

- This is primarily due to weakening MYR to the USD.

Not easy to predict next month's price. RM/L has risen from 1.78 to 1.82 which is not huge however because it should have been +15sen last round instead of +10sen I'm willing to predict that fuel price will increase by 5sen. Najib has showered you folks with his 'so called' goodies and handouts so I guess there isn't anything left. Fuel price to stay @ RM2.05 is still possible, a drop in price is out of the question so there is no harm to fill your tank before 1st November (Sunday).

Below is a table of my previous predictions way back to the beginning of 2015. My predictions are based on Tapis crude oil price, performance of Ringgit (added after Mar) & domestic politics (which was added after May). My total savings to date: RM 43.75 (I have already exceeded RM 42 and now heading towards RM50)

**It is easier to predict the direction of fuel price than to estimate amount of swing of fuel price due to the government REFUSING to disclose the compute mechanism.**

Budget 2016: Ini Kerja Bodoh

Data sources: EPF's annual reports (KWSP), Ministry of Finance (MoF), Bank Negara Malaysia (BNM) and Auditor's General Report and Economic Planning Unit (EPU).

You may refer to my compiled sources here: Malaysian National Budget via Dropbox

Spending more than we earn for a new record of 17 years in a row.

Hence we have been running fiscal deficits since the financial crisis of 1999. *I do not know how Najib came with 3.1% deficit, my calc says 3.6%.

Operating expenditure has now hit another new record high of 82% of our national budget allocation. Development expenditure is being squeezed hard. During Dr.M's time it was 30s, Pak Lah's at 20s and now Jib Goh's a pathetic 10s.

The country's national debt (domestic debt + foreign debt) is just short of its self-imposed ceiling of 55%. Although it has improved to a gap of 1%, subsidies have been cut and cost raised across the board.

While the disturbing ratio of Operational versus Development Expenditure has already raised red flags, the budget is screaming troubles from whichever angle you look at it. For the first time, multiple ministries see their budget being cut although the fuel subsidies have been cut altogether. Even tax money from GST is insufficient to pay for Najib’s mismanagement. Proof : What happened to last year's billions?)

Najib has allocated for himself (PM's Dept) a huge budget of RM20.3 Billion - 7.6% of the total budget.  Banyak cantik. Inside this RM20 billion is a special allocation of RM1.6 Billion for 'special projects'? To pay for this, that and that. Thats RM20 billion up in smoke, with nothing to show for it.

A few things I would like to highlight, things that was promised but lied through his teeth.

[1] Housing – a whopping RM1.6 billion is allocated to build 175,000 PR1MA units, of which Najib administration claims to be 20% cheaper than market price. Last year during Budget 2015, Najib boasted about building 80,000 units of such affordable housing units with RM1.3 billion allocation. A year earlier in 2013, he promised to build 123,000 PR1MA with RM1.9 billion.

So, since the mouth watering project was launched in 2011 and established under the PR1MA Act 2012, PM Najib Razak was supposed to deliver at least 203,000 PR1MA homes under allocation of RM3.2 billion. However, based on Economic Report 2014/2015 released on Oct 2014, it had only built 7,336 units. So, where’re the rest of the houses?

So, how can Najib promise to build 175,000 houses with RM1.6 billion in his latest budget 2016? when he can't even build 203,000 with RM3.2 bil! The Maths doesn’t add up.

[2] Income tax - He said about lowering everybody’s personal income tax accordingly, in exchange to taxing people via new GST tax. Well he just increased from 25% to 26% for people earning between RM600,000 and RM1 million. Punishing the rich again for working hard. If you are lazier, you pay less tax. We should have one standard income tax rate for both corporate and individual - a flat rate.

[3] Investments - How many times you want to repeat bro? The Pan-Borneo Sarawak Highway, which is set to be completed in 2021, will be toll-free.  (I say I think this is the THIRD Budget where they are repeating this Borneo Highway project. Dah start ke belum?) Also about the so called RM137 billion of investment initiatives that were announced during the 2016 Budget Day. The number is huge and the money is sexy, provided they’re new investment and genuine. Unfortunately, only 3.1% of roughly RM4.2 billion can be considered “real” initiatives, if MP Dr Ong Kian Ming’s analysis is correct.

Treat Budget 2016 investment initiatives with caution – Ong Kian Ming

[4] Cost of Living - Sure, there’re some candies for the financial illiterates. Some items will be zero-rated GST. The tax relief for each child below 18 years of age is increased from RM1,000 to RM2,000. The tax relief for the individual taxpayer whose spouse has no income is increased from RM3,000 to RM4,000. Free money BR1M will be continued and the list goes on. But there’re many areas which suffer various cuts this time and let me tell you I'm 101% sure cost of living will go up, if this is proven untrue please email me I will give you my own version of BR1M. 

- A RM950 million cooking oil “subsidy” cut could probably mean a higher price for cooking oil.

- The Transport Ministry will see a budget reduction of RM648 million which means transportation cost is likely set to increase.

- The second largest cut was targeted at the Higher Education Ministry which saw its budget reduced by RM2.4 billion to RM13.378 billion. To make up for the shortfall, public universities will suffer the brunt of the cut as they will see their funding reduced by RM1.442 billion. Tuition fees will go up.

- The Transport Ministry will see a budget reduction of 14.1 percent, or RM648 million, to RM3.955 billion, the fourth largest cut among the ministries. Areas that will see cuts include subsidies for KTM trains and flights from rural regions. Habis, fares will have to go up to compensate.

- The Energy, Green Technology, and Water Ministry comes in at fifth place for the largest allocation cut under Budget 2016, with a reduction of RM605 million to RM2.262 million. Consumers who will suffer the most as the single largest slash is the electricity bill subsidy of RM150 million which will be completely defunded.

And I saved the best for last.

The worst part of the Budget is the RM1000 minimum wage. Why increase the Minimum Wage from RM900 to RM1000? Because the first round of Minimum Wage sent inflation sky rocketing.  

Whatever extra salary earned was eaten up in higher prices. Now they have to raise the minimum wage even more. The prices will go up again. Why? because employers sufffer higher salary costs and they must recoup the higher salaries. Prices will go up. People will suffer again.

Then the Minimum Wages will be raised up again and again. Prices will go up again. It is never ending.

Ini Kerja Bodoh. Yet Budget 2016 can deliver so little with every corner being cut....Najib Razak is such a pathetic finance minister.

Pemandu Survey Needs Your Vote

Dear readers, Pemandu is conducting a short online survey to seek public views on English language. I assure you it's really short: only 7 questions. Survey is anonymous and no personal data is collected. Pemandu stands for "Performance Management and Delivery Unit", a unit under the Prime Minister's Office (it's okay if you don't like the Super Moron, nobody does) but they are many other people who wants to see Malaysia succeed so it is our duty to help as a model citizen. Therefore do VOTE, it counts. Here is the link: http://goo.gl/forms/u09WpY91mJ. Do share out to friends and family.

Datuk Seri Idris Jala, Pemandu's CEO

The seven multiple-choice questions in the survey are:

> Would you consider some subjects in school to be taught in another language besides Bahasa Malaysia?

> If Yes, which language would be your preferred choice?

> In your opinion, should some subjects in schools be taught in English to improve students’ proficiency in the language?

> Do you think teaching English in other subjects would reduce the importance of Bahasa Malaysia as our national language?

> If English is used as a language to teach other subjects, what subjects should be taught in that language?

> Based on your Question 5 answers, please explain why.

> How important do you think being proficient in English contributes to a student’s career?


Thank you for your time.