My thoughts..

In my preceding posting, i did cover on the Malaysia's government attempts to stabilize its economic position by increasing the prices of fuel, effective January next year..

1st Suggestion:

Owh bro Marriz.. I strongly agree on that point.. We, as the residents of Brunei should be grateful with the help given..

When the subsidy of fuel is to be decreased, then with the current situation of increasing world price of fuel, the general fuel consumers would only be able less volumes of fuel with the same price of money.. This is as per the Law of Demand where when the price increases, the demand will decrease..

By doing so, not only the demand will decrease, it will also suggest a reduction in the volumes of fuel consumption.. Hence, more energy can be conserved..

The reduction in the subsidy of fuel can be used to subsidize another productive capital expenditure.. As being mentioned in my old posting, with the B$ 202M the government can open up new schools, better infrastructures, encourages entrepreneurship among the locals..

I believe the three above mentioned capital expenditure is far more productive than fully subsidizing the amount to the fuel..

By opening up new school, we can produce new generation of intellectuals who can contribute to the better economic development..

With better infrastructures, the general residents are able to experience a better standard of living.. Better standard of living with better quality of life.. Please bear in mind the two terms are different..

Further more, with that huge amount of subsidy the government can encourage entrepreneurship among the local.. So instead of seeking for job, the local can now be the job provider.. So less unemployment and social crimes.. Domestic production will definitely increase, the it can be exported elsewhere.. Hence it leads to economic growth, due to a surplus balance of payment..

Second Suggestion:
Marriz suggested that salary and wages should also be increased..

Perhaps he perceived that the increase in the prices of fuel can be off-set by an increase in salary and wages.. But it would leads to a bigger root problem..

For this i have to agree with Lady and Shamyza point of view..

Dear reader(s), the increase in the salary and wages seem to be good but economically, it isn’t.. With a greater salary and wages, spending will also increase.. In this situation, the economy is said to experience an inflation.. An inflation is the situation where too many money chasing after a very few commodities..

For the same reason, the general public will have the ability to buy more imported products.. This is bad for the country as this will lead to a disequilibrium balance of payment due to greater payment than it receipts.. The lacking of demand on domestic products will cause the foreign-competing firm in the country unable to compete with the foreign firm.. Hence, some firms might have the last resort to lay off some of the workers so the unemployment and crime rates will also increase..

However, part of me believe that when increasing inflation rates is taken into account, some of the current salary scales might no longer be appropriate..

Thing to be noted here is the different between the pay and perks offered by the government and private sector.. Thanks to the government.. Brunei is fortunate to have such a very conducive economic environment..