How They Twist and Shout

As i said in my previous post, i shall explain how the government has cheated their way to personal riches.

According to my sister yet again, Malaysia purchases very low grade oil, where there is high sulphure content. The lower the grade, as I said before, the cheaper the price. just like any other commodities, there is a base price. for those who know economics, take example inflation, we compare index prices of the current and base year. same thing here, say Grade A is used as the base grade for the base price, hence any other grade will be valued against that.

Our nextdoor neighbours however, do not purchase low grade oil. in fact, thailand and singapore purchase very high quality oil. That is why when we compare our prices to our neighbours' prices, ours seem relatively,lower, in fact,much lower. but the government manipulate the fact and took advantage of it. Without shame, they stated that we should be thankful they subsidize a alot compared to other countries by comparing the oil prices. the reality is that, we buy oil at a lower price in the first place. in fact, it's safe to say that our neighbours' might be the one heavily subsidized by their government in terms of real instead of nominal value. There is an article on Malaysia today that can help you understand more, i will post the link shortly.

For those who do not know what real and nominal value is, here goes:

lets say you go two different kedai mamak. the first one sells roti canai for 1 ringgit, the second for 50 cents. since you are short of cash, you ask your friend to split the cost with you, but ofcourse,not the roti canai. for the first kedai mamak, your friend paid 40 cents for you. for the second one, your friend paid 10 cents. which means you only had to pay 60 cents and 40 cents.

so here you are thinking, you paid more for the first compared to the second roti canai. Nominally yes, as 60 cents is more than 40. but in terms of real value, for the first one, you only paid for 3/5 of the real price(1ringgit) whereas, for the second one you paid 4/5 of the price ( 50 cents). so in real value, eating more roti canai from kedai mamak number one is more untung. get it?