In this study we aimed at considering the impact of intervention of government on the

economy of fuel demand and supply and relevant issues in this regard in Malaysia.

Subsidy:

Most of the time in government, smart economic policy is sacrificed in order to achieve
political favor, Whether it’s price ceilings on petrol in Malaysia or china, Zimbabwe’s
slashing of food prices, harmful import restrictions to benefit domestic producers, or the
proposed suspension of gas taxes in a time when fuel conservation is really what’s needed.

Pricing:

The dependency of oil prices on various factors such as local sources availability (supply),
market demand, cost distribution; the local currency valuation is undeniable. The gasoline
cost for the consumer is also dependent on the national pricing policy, such as high gas taxes
or subsidized costs.

Regarding the fact that demand of oil is planned to grow through 2008, analysts expect that
the production of crude oil to be considerably higher than the demand which means more
supply than demand. When the supply is more than demand it may be assumed that the oil
price decreases but the trend shows different behavior, Oil prices rising.

Currently combinations of numerous factors have an impact on crude prices such as:

1. Market speculation

2. Growing rate of Malaysian ringgit comparing to US dollar

3. Geopolitical uncertainties.

Over the past year, various factors have affected oil prices in terms of political issues. A war
expected between the USA and Iran, lack of certainties of oil supply from Venezuela, among
others, but market speculation has been fuelled by the unrest in Nigeria.

Focusing on the relatively “safer” oil producing regions might make for more stable energy
stocks. Political uncertainties in the Middle East and Nigeria have been reflected in
fluctuating oil prices. Investors are also likely to benefit from focusing on the natural gas
sector, since consumers are likely to switch more readily to natural gas when there is a lack of
crude supply rather than trying the totally new concept of bio-fuels.

In short term view, oil prices are to some extent not flexible due to the fact that inflation and
soaring rate of prices is not an important predictor on oil demand. Consumers always need to
use their vehicle or public transport in order to get to work and to cover other issues.
Speaking in terms of long term economy, this issue may vary and significantly altered, focus
of government and innovative ideas may create incentives for utilization of alternative energy
sources. Malaysian government is currently practicing Bio-fuels and palm oil as substitute to
gradually shift from oil.

Considering consumers in terms of consuming oil, high oil prices leads directly into control
spending. A lot of products prices are directly or indirectly linked to the price of oil such as
food, So, as the price of oil rises, so does the price of commodities. But this isn’t good news
for the retail industry and so on. Consequently, the general public uses their vehicle less,
reduces their shopping sprees and just waits it out till the economy and/or personal finances
show an improvement. This issue for government can be considered as a real threat. When
there is a concern in the market demand, market volatility increases. In this regard
government intervention becomes a necessity.

Technically speaking, Higher GDP growth assumptions, or higher income elasticity of

demand, in non-OECD countries, could imply that prices rise significantly more than in the
baseline scenario, or that OPEC is prepared to increase its market share significantly (from 38
per cent in 2003 to around 55 per cent in 2030).

Over the longer term, behavioral responses to higher prices could constrain cartel-like
behavior, particularly given the endogenous but non-reversible nature of technological
progress in nonconventional supply and in oil consumption.

In the short run, the low price elasticity of global demand and non-OPEC supply make oil
prices highly sensitive to supply and demand shifts. Price volatility, compounded by
geopolitical tensions, raises uncertainty about underlying price trends may depress oil
exploration.

In Malaysia, the openness of the Malaysian economy makes external conditions a primary
determinant of changes in the domestic price level. The degree to which the economy is
exposed to international economic developments is seen in the fact that exports and imports.
A substantial amount of researches suggest that the relation between oil prices and economic
activity is nonlinear. Nonlinearity between oil prices and economic activity implies the
following results:

1. Only oil price increases would affect the economy and oil price decreases cannot
produce this effect.

2. Oil price increases after a long period of stable prices would have a larger effect than
those that simply correct previous decreases.

Empirical results from research done by Loungani (1986), Davis(1987a,b), Mork (1989), Lee,
Ni and Ratti(1995), Hamilton (1996), and Balke, Brown, and Yucel (1999) and many others
confirm the above nonlinear behavior.

Oil prices are regulated by the supply and demand curves. On the other hand, if the demand
increases, the commission would increase the amount of oil production. Decrease in the
demand for oil would compel the OPEC organization to cut oil production rate in line with
the weak demand to stabilize the oil price. It is also of the same trend for increase in oil
demand. Thus, the only events that would change the oil prices were exogenous disruptions
to supply.

Disruptions to supply can come in many forms like due to:

1- Military conflicts in the Middle East,

2- Tropical storms or hurricanes destroy the oil production infrastructure.

3- The other form is economic slowdown or rather recession, which would cause the demand
for oil to drop.

Thereby causing a drop in oil prices. There is a special feature of the Malaysia’s petroleum
pump prices. It is subsidized to a substantial amount unlike the petroleum pump prices in the
US. This subsidized feature must be incorporated into our analysis even though the amount of
subsidy will definitely depend on the world oil prices. Malaysia’s petroleum pump price is
also depending largely on world oil prices. The amount of subsidy not only constitutes as an
important exogenous shock on Malaysia’s GDP growth but also on oil prices (Yip Chee Yin ,
Lim Hock Eam, Asan Ali Golam Hassan, 2009)
Subsidy leads to an artificially low rate of inflation for countries that provide oil subsidies.
On the other hand, headline inflation in developed nations or countries with no such subsidies
remains artificially high.

When oil prices rise, such as the record highs seen in July 2008, subsidies help to smoothen
out the effect of price hikes across a nation’s budget. If, however, oil prices continue to be
high, governments will sooner or later be forced into cutting the subsidies in order to curb its
losses.

The way forward for governments across the world is to move subsidies currently allocated
for fossil fuels to renewable energy sources.

Government Policy:

Recently, the Malaysian Government revamped its petrol subsidy system by increasing petrol
prices, in Malaysian Ringgit terms it’s a spike in cost of living. Public expectation here is low
petrol prices because Malaysia is an oil-producing country.

This price hike caused the following to happen in chain-effect:

1. Transportation companies announced increases,

2. PETRONAS announced gas price increase,

3. Electricity rates increased,

4. Kuala Lumpur stock exchange fell 27 points the next day the price hike was
announced,

5. An island-state said that low-cost housing was no longer possible in anticipation of

rising building materials cost,

6. Other Government-price-controlled food items such chicken had their ceiling price
removed,

The main argument for the fuel price increase is that the heavy government subsidies eat
into the economy pie and that the Malaysian fuel subsidies flows to its neighbors Thailand
and Singapore (in a limited way). Thailand and Singaporean vehicle traffic into Malaysia is
estimated to be above 200,000 vehicles a day across the Thai-Malaysian and Singapore-
Malaysia borders. The Thailand and Singapore cars fill-up before leaving for home.
Singaporeans are allowed only a three-quarter full gas tank as their vehicles cross the border.

The Malaysian Government got USD12.23 (RM40) billion in the subsidy cuts in 2008. With
the savings there promises of improving and expanding the public transport system and other
public-beneficial programmes. Citizens take this fuel price hike from a political viewpoint as
well as the economics of it.

Public expectation is on the Malaysian Government to improve the public transport

infrastructure which they have promised to do (Government has done some changes in public
transportation since then up to 2010). Public transport is important so people can all leave our
cars at home and start using a cheaper means of transport. In 2008, the Malaysian
Government slashes RM2 billion of its ministers’ entertainment allowances and promises no
further fuel price hikes that year but as market experienced, in 2010 fuel increase by 5 cents
to 1.85 malaysian ringgit.

Malaysia has started to realize the importance to adopt renewable energy in the energy mix
and continuously reviewed its energy policy to ensure sustainable energy supply and security.
Malaysian Fuel Price History
Now we are going to review the Malaysian Fuel Price in order to know when the biggest shift
in fuel price has occurred and this hiking caused what kind of impact on demand and supply
for its complementary product. In this project we consider automobile industry as a
complementary product and evaluate the effect of shifting on buying behaviour of Malaysian
customers.

Table 1-1
FUEL PRICE LISTING OF RON97 IN MALAYSIA
=============================
Date              Price(RM)/liter              Crude oil price(USD)/barrel
Before ‘90   – RM 0.89/L              $ 18.33
year 1990   – RM 1.10 (+0.21)  |  $ 24.29  (+32.5%)
01/10/2000 – RM 1.20 (+0.10)  |  $ 24.68  (+0.8%)
20/10/2001 – RM 1.30 (+0.10)  |  $ 25.90  (+4.9%)
01/05/2002 – RM 1.32 (+0.02)  |  $ 30.86  (+19.2%)
31/10/2002 – RM 1.33 (+0.01)  |  $ 24.53  (-25.8%)
01/03/2003 – RM 1.35 (+0.02)  |  $ 31.54  (+28.6%)
01/05/2004 – RM 1.37 (+0.02)  |  $ 40.28  (+27.7%)
01/10/2004 – RM 1.42 (+0.05)  |  $ 53.13  (+31.9%)
05/05/2005 – RM 1.52 (+0.10)  |  $ 56.26  (+5.9%)
31/07/2005 – RM 1.62 (+0.10)  |  $ 58.70  (+4.3%)
28/02/2006 – RM 1.92 (+0.30)  |  $ 61.64  (+5.0%)
05/06/2008 – RM 2.70 (+0.78)  |  $ 121.00 (+96.3%)
23/08/2008 – RM 2.55 (-0.15)  |  $ 114.60 (-5.6%)
25/09/2008 – RM 2.45 (-0.10)  |  $ 109.20 (-4.9%)
15/10/2008 – RM 2.30 (-0.15)  |  $ 84.07   (-29.9%)
01/11/2008 – RM 2.15 (-0.15)  |  $ 64.38   (-30.6%)
19/11/2008 – RM 2.00 (-0.15)  |  $ 55.37   (-16.3%)
03/12/2008 – RM 1.90 (-0.10)  |  $ 46.96   (-17.9%)
16/12/2008 – RM 1.80 (-0.10)  |  $ 46.28   (-1.5%)
01/09/2009 – RM 2.05 (+0.25)  |  $ 69.96   (+51.2%)
16/07/2010 -  RM 1.85

Source: http://galvintan.com/malaysian-fuel-price-history/
Through this table it can be seen that there is a dramatic increase in crude oil and petrol price
between (28/02/2006 - 05/06/2008). While the fuel price was around – RM 1.92 (+0.30) and
crude oil price $ 61.64  (+5.0%) in 2006, suddenly in (05/06/2008 ) there is huge jump in
price to RM 2.70 (+0.78) while crude oil experienced  $ 121.00 (+96.3%)per barrel with
around %96.3 increase compare to year 2006.

Source: http://www.wtrg.com/prices.htm

In the above graph it was shown there is a huge jump in price of oil in 2007-2008 and after
that there is recession which again lead to diminishing price ,and it was explain on the graph
why in different years there are different peak which was discussed some this reason earlier.
Besides, next graph elaborately illustrate the price and production for crude oil.
Source: http://www.wtrg.com/prices.htm

in this graph it was demonstrated that when there is a huge jump in price from around 2006 to
2008,production and supply of the fuel by opec has been increased to the peak of more than
32 million barrel per day.

Effect on the Market (on complementary Product)

Shift in the fuel price put effect not only local market in Malaysia but also global market gets
influenced by this changing in price.

1. Effect of fuel price shifting on (Global market):

In 2006 there were 49,886,549 passenger cars produced in the world, with an increase of 6.45% over
the previous year. The increase for 2007 was more modest, and 2008 showed a decline. Analysts
from various institutes had in fact pegged the year 2007 as the year which would end the 5-year
cycle (2002, 2003, 2004, 2005, 2006) of record global auto sales worldwide. When we look at the
price in the table 1-1.a it can be seen in 2008 while the number of car production in the world
according to table 1-2 has been decreased more than 2 million, because of the lower demand, fuel
price and crude oil experienced a huge jump in price from $ 61.64 in 2006   to $ 121.00 (+96.3%) in
2008 with the %96.3 growth. Even according to the number of car production table in Appendix, in
2008, Malaysia experience a diminishing in number of production equal to -%10.8.It means even the
global market for automobile in terms of supply and demand is under influence of crude oil and fuel
price.

Table 1-2

cars produced in the

Year
world

2009 (projection) 51,971,328

2008 52,940,559
2007 54,920,317
2006 49,886,549
2005 46,862,978
2004 44,554,268
2003 41,968,666
2002 41,358,394
2001 39,825,888
2000 41,215,653
1999 39,759,847
Source: ACEA –European Automobile Manufacturer’s Association

Table 1-1.a
Crude oil
Date  Price(RM)/liter
price(USD)/barrel
28/2/2006 RM 1.92 (+0.30) $ 61.64  (+5.0%)
5/6/2008 RM 2.70 (+0.78) $ 121.00 (+96.3%)
Source: FUEL PRICE LISTING OF RON97 IN MALAYSIA
Source: ACEA –European Automobile Manufacturer’s Association

Number of cars produced in 2008 in Malaysia

Total
Country Cars Commercial Vehicles Total
Change
Malaysia 377,952 125,021 502,973 -10,8%

Source: http://www.worldometers.info/cars/

2) Effect of fuel price shifting on (Malysian market):

Drop in sales

As an example just in 2008, Proton's sales dropped 30.4% from 166,118 in 2005 to 115,538
for the Malaysian market, with a later report indicating a 55% fall of sales to 962.3 million
ringgit, its lowest in at least seven years. Proton's market share fell from 44% in 2006 to 32%
in 2008. In the period ending December 31, 2008, Proton has also suffered three consecutive
quarterly losses. Compared to a profit of 86.5 million ringgit in 2005, the car company lost
281.5 million ringgit in 2007. Proton blamed discounts from rivals. Total losses in 2008s
financial year climbed to $169 million.

*** What Malaysian government did for protecting their national brands car?!

Government policy has kept the Proton cheaper than other makes by the simple strategy of
taxing the competition, while giving Proton exemptions or rebates from these same taxes.
Duties on packages of parts for assembly into complete cars in Malaysia is said to average
about 30%. Proton is exempted from most of these.

On 1 January 2008, the postponed-several-times full implementation of an ASEAN Free

Trade Agreement which Malaysia originally signed on to in January 1992, was to finally
have come into effect. The agreement would effectively bar practices that discriminate
against goods (including vehicles) that are considered “Made in ASEAN” by the use
of Tariff and/or Non-Tariff Barriers. This would practically eliminate most of the price
advantage, achieved by way of the 50% rebate Proton (and other “Malaysian-made” cars)
enjoy on a hefty (75 to 105%) engine-capacity-related Excise Duty applied to new cars sold
in Malaysia.

An ASEAN (Thai-made) Honda or Toyota would sell for within 10% of a comparable
Proton, and would probably result in the devastation of Proton's market share and the
company. As it appears that this would be an unacceptable consequence to the Malaysian
government, for the time being, local car manufacturers will be allowed to continue receiving
the excise duty rebate, with the Malaysian Government picking up the tab for probable
penalties it will have to pay to ASEAN members for violating established free-trade
regulations.

The very latest update to the Malaysian Automotive Policy framework (October 2009) fails
to mention any change in this discriminatory rebate policy, thereby reinforcing the suspicion
that the Government will not abide by stipulated "level playing field" requirements for the
foreseeable future. It should be noted that the main “solution” being pushed by the
Malaysian Government to maintain the pricing advantage of locally-made cars, by
providing grants and subsidies (to counteract any potential removal of the excise Duty rebate)
would also be deemed to be non-compliant with the Trade Agreement, contravening Non-
tariff barriers to trade requirements.

The lack of direct competition at Proton models' price points (in Malaysia) has also allowed
Proton, for many years, to continue selling very outdated designs, generally with scant
regards to providing basic safety equipment such as airbags and anti-lock braking in domestic
models. Additionally, J.D. Power survey results have consistently shown that Protons have
poorer rankings in initial quality than the available competition.
 Price S

Eo
Po=RM1.7

Qo Quantity

Price of fuel in 2006 at around RM1.70.in Feb 2007,according to the above table OPEC
decrease their supply 500,000 so the price goes up dramatically.

S1
 S1

Price S
E1
P1=RM2.70

Eo
Po=RM1.70

Q1 Qo Quantity

When the price goes up because of the lower supply, quantity demanded has been decreased,
but this price cannot be constant, because after a while the oil producer will have surplus
product so for finding customer have to diminish their price, so the price will be decrease and
reached to equilibrium price(market price again),in the underlying graph it can be seen, after
in 2006 to beginning of 2008 price for petrol in Malaysia jump around RM1 per litter, there
were a significant effect on Malaysian economy such as their automotive industry and
purchasing power of people for buying the car, if you look at the appendix, it can be seen
around -%10.8 decrease has occurred in total car produced and large decrease in car
purchasing with in this year

Surplus

Price S
P1=RM2.70

Eo
Po=RM1.70

Q1 Qo Q2 Quantity
 S1

Price S
E1
P1=RM2.70

Eo
Po=RM1.70

D1

Q1 Qo Quantity

Price of fuel goes up to peak RM2.70 in this case it happens when at the first supply
decreased so the price was increased, then consumer reduce their consumption and because of
the developing the public transportation by government so the demand was shifted and it was
reduced so in this case because of the lower supply, besides economic recession with in 2008
the price experience the peak, but at the end of the 2008 again government could control the
price and cut it again to the RM 1.80 because they cut the subsidy then demand decreased and
with a constant supply price diminished again to reach to the RM1.80 per litter,

How Malaysian government calculate Oil price (for their local

market)

Pump prices have been determined through the Automatic Pricing Mechanism (APM) since
1983. APM accounts for the global market price of petrol, marketing and transportation costs
and a margin for dealers. When the market price is below the pump price (inclusive of all the
other costs as worked out through the APM), the government collects a duty. When the
market price exceeds the pump price, the government provides a subsidy to bridge the
difference. Thus, subsidy payouts will increase with increases in the market price.

Prior to 2004, the government collected duties, as the market price was lower than the pump
price. Since then, it has been paying subsidies (Mikhail Raj, 2008). For six months, from
September 2001 to February 2002, the government also collected taxes from the retail sales
of petrol (Cheah, 2008: N10).
When Oil price goes Up ...

In March 2006 launch of the Ninth Malaysia Plan envisaged that RM200 billion would be
spent in public development expenditures between 2006 and 2010. This represented an 18%
increase over the previous five-year period. The situation was exacerbated when crude oil
prices hit record high levels in May 2008 and domestic petroleum prices were raised in order
to reduce subsidy costs.

What Government did in this fluctuation in price within 2008?

This is a curious claim. Since June 2008, when the petrol price was steeply increased, the
government announced that the fuel subsidy would be fixed at 30 sen per litre, regardless of
the oil price. Consequently, falling oil prices will induce higher consumption and result in
greater outlays on the fuel subsidy and will not induce ‘savings’, as the Minister claimed. In a
subsequent statement, the Minister of Domestic Trade and Consumer Affairs announced that
the government had stopped paying fuel subsidies from November 2008 and it will save
RM10 billion in subsidies next year if prices remained stable (Cheah, 2008: N10).

On 4 November 2008,The Finance Minister announced an additional stimulus package of

RM7 billion in order to prevent the effects of the recession gripping the world. He revised the
2009 deficit upwards, to 4.8% of the GDP. The additional funds will come from savings in
subsidies made possible by falling oil prices. However, if oil prices remain soft in 2009,
revenues will be adversely affected in 2010 .
When government, faced with rising oil prices in the middle of 2008, the Second Finance
Minister indicated that spending on subsidies might rise, from the original figure of RM34
billion to at least RM40 billion. Subsidies have now become almost as large as emoluments,
the single largest item in operating expenditures (Zainal, 2008).

What Government did in this fluctuation in Oil price since 2004-

2008?

As specified by the National Food Supply Guarantee Policy, subsidised items include fuel,
cooking oil, flour, bread, and imported rice. However, the biggest share of the subsidy bill
goes towards subsidised fuels (petrol, diesel and LPG). Fuel subsidies began ballooning in
2004, when the market price for fuel rose substantially above the pump price determined by
the government.

By 2006, the fuel subsidy amounted to RM7.3 billion, comprising 56.6 % of the subsidy
allocation. By 2007, the fuel subsidy had increased to RM8.7 billion and accounted for 64%
of the allocation. The fuel subsidy was projected to be RM18.3 billion (based on a crude oil
price of US 105 per barrel) in 2008. This could amount to 54% of the subsidy allocation
(Bernama.com, 2009). However, an ease in the price of crude oil would change this figure.

In an attempt to reel in the fuel subsidy bill, the government announced a 41% increase in
petrol price in June 2008. The expected savings of RM13.7 billion will be rechanneled into
the subsidisation of other essential items (Table 7). The government subsequently
committed itself to maintaining the petrol subsidy at 30 sen per litre, regardless of oil prices
(Loh, 2008: 4). But as it was discussed after softening the price in the same year 2008 they
cut subsidy.
Until 2008, diesel and gasoline were both subsidized by government for different sectors at
different rates. These sectors were gasoline stations (retail), operators of fishing vessels,
public road transport and public river transport. The government sets the prices for a fixed
period. In February 2006, the prices for diesel were:

- Petrol stations 1.581 RM/liter

- Fishermen 1.00 RM/liter
- Public transport (roads) 1.431 RM/liter
- Public transport (rivers) 1.20 RM/liter

On 5 June 2008, the government revised fuel subsidies, regarding increasing costs to budget
and standardized the subsidy rates. The price of gasoline for RON 97 was increased to RM
2.70 (US$ 0.83) per liter, and for RON 92 to RM 2.62 (US$ 0.80). The diesel price was
raised up to RM 2.58 (US$ 0.79) per liter. The Malaysian government has not released details
about how the subsidized price will be calculated (i.e. whether it will take into account
distribution and retailer costs).
The Government revealed that it had ceased subsidizing petrol as of 1 November 2008
when the price of oil dipped below US$65 per barrel.

A substantial portion of the revenue for 2009 will come from taxes on petroleum, petroleum
products and dividends from Petronas. From this perspective, the high oil prices that
prevailed during much of 2008 have been a great advantage. However, due to softening oil
prices and the likelihood that developed countries experiencing recessions will demand less
oil, oil prices may remain low in 2009. This, in turn, will adversely affect government
receipts in 2010.

Generally,public sector cannot continue with its dependency on revenue from petroleum,
petroleum products and petroleum related activities. Not only is petroleum a depleting
resource, it is a volatile source of revenue. Successful fiscal management, therefore, depends
on how well Malaysia can reduce non-productive expenditures and wasteful leakages and
how efficiently it can tap into new and reliable sources of revenue.

Energy mix

Malaysia has adopted the Five-fuel Diversification Strategy energy mix since 1999, whereby
the five main sources are oil,natural gas, coal, hydro and RE.
Oil

The contribution of oil in Malaysia energy mix was once up to 87.9% before the Four-Fuel
diversification Strategy was implemented in 1981. After the international oil crisis in 1973
and 1979,the government had called for the diversification of energy resources to prevent
over-dependency on oil. Malaysia has proven oil reserves of 5.46 billion barrels as of January
2008.

Although Malaysia’s oil output declined somewhat in 2006. Average production for 2006
stood at 798,000 barrels/day (bbl/d), down 7% from 2005 levels. In 2006, Malaysia
consumed an estimated 515,000 bbl/d of oil, with net exports of about 283,000 bbl/d.
Malaysia’s proven oil reserves have declined in recent years and the oil production fell to
693,000 bbl/d in 2008, a 13% decrease from 2006 level [8]. Provided that the production rate
is consistent at around 700,000 bbl/d, Malaysia’s oil reserves will be exhausted in around 20
years.

Government Policy about Energy efficiency

As a significant element of Malaysia government policy, energy efficiency (EE) is explicitly

addressed in the 9th Malaysia Plan (2006–2010) besides promulgating the use of RE to
ensure energy supply sustainability for continuous economic growth. EE programs focus on
energy saving features in the industrial and commercial sectors as well as residential in the
domestic sectors.

The industrial sector is expected to implement measures for improvements in plant,

equipment and processes as well as the end uses. Promotion of the use of high efficiency
motors includes initiatives to develop local expertise in the manufacture of energy efficient
equipment and machinery.
Energy efficiency measures are to be intensified in the industrial, transport and commercial
sectors, and in government buildings .The industrial sector is the largest consumer of energy,
rivalled only by the transportation sector. Over the 8th Malaysia Plan period (2001–2005),
the energy consumption was projected to grow at an average of 7.8% annually and more than
double over a 10-year period if no initiatives are implemented to improve the energy use
efficiency performance of the economic sectors. The manufacturing sector is projected to
consume 38.2% of the total commercial energy at the end of 2005, an increase from 37.1%
in2000 or at the end of the 7th Malaysia Plan, a growth rate of 8.5%.

As a result, It is important to remember that a heavy dependence on petroleum for

revenue introduces an inherent instability to the receipts of the Federal government.
This is due to the volatility of oil prices.
Appendix: (Number of cars produced in 2008 in whole the world)

Commercial
Country Cars Total Total Change
Vehicles
Argentina 263,120 168,981 432,101 35,1%
Australia 270,000 60,900 330,900 -16,2%
Austria 248,059 26,873 274,932 8,6%
Belgium 881,929 36,127 918,056 -1,2%
Brazil 2,092,029 519,005 2,611,034 3,3%
Canada 1,389,536 1,182,756 2,572,292 -4,3%
China 5,233,132 1,955,576 7,188,708 25,9%
Czech Rep. 848,922 5,985 854,907 41,3%
Egypt 59,462 32,111 91,573 32,2%
Finland 32,417 353 32,770 51,4%
France 2,723,196 446,023 3,169,219 -10,7%
Germany 5,398,508 421,106 5,819,614 1,1%
Hungary 187,633 3,190 190,823 25,5%
India 1,473,000 546,808 2,019,808 24,2%
Indonesia 206,321 89,687 296,008 -40,1%
Iran 800,000 104,500 904,500 10,7%
Italy 892,502 319,092 1,211,594 16,7%
Japan 9,756,515 1,727,718 11,484,233 6,3%
Malaysia 377,952 125,021 502,973 -10,8%
Mexico 1,097,619 947,899 2,045,518 22,4%
Netherlands 87,332 72,122 159,454 -11,8%
Poland 632,300 82,300 714,600 14,2%
Portugal 143,478 83,847 227,325 3,7%
Romania 201,663 11,934 213,597 9,6%
Russia 1,177,918 330,440 1,508,358 11,6%
Serbia 9,832 1,350 11,182 -21,1%
Slovakia 295,391 0 295,391 35,3%
Slovenia 115,000 35,320 150,320 -15,5%
South Africa 334,482 253,237 587,719 11,9%
South Korea 3,489,136 350,966 3,840,102 3,8%
Spain 2,078,639 698,796 2,777,435 0,9%
Sweden 288,583 44,585 333,168 -1,6%
Taiwan 211,306 91,915 303,221 -32,1%
Thailand 298,819 895,607 1,296,060 15,2%
Turkey 545,682 442,098 987,780 12,4%
Ukraine 274,860 20,400 295,260 36,8%
UK 1,442,085 206,303 1,648,388 -8,6%
USA 4,366,220 6,897,766 11,263,986 -6,0%
Uzbekistan 100,000 10,000 110,000 14,8%
Supplementary 411,982 129,210 541,192  
Totals 52,940,559 19,240,607 72,181,166 -3,6%
Source: http://www.worldometers.info/cars/

References:
1. Davis, Steven J. (1987a), “FLUCTUATIONS IN THE PACE OF LABOR REALLOCATION” in K. Brunner and
A. H. Meltzer, eds., Empirical Studies of Velocity, Real Exchange Rates, Unemployment and Productivity, Carnegie-
Rochester Conference Series on Public Policy, 24, Amsterdam: North Holland.
2. Lee, Kiseok, and Shawn Ni (1999), “ON THE DYNAMIC EFFECTS OF OIL PRICE SHOCKS” A Study using
Industry Level Data,” working paper, University of Missouri, Columbia
3. Loungani, Prakash (1986), “OIL PRICE SHOCKS AND THE DISPERSION HYPOTHESIS,” Review of
Economics and Statistics, 58, pp. 536-539.
4. Hamilton (1996), “THIS IS WHAT HAPPEED TO THE OIL PRICE-MACROECONOMY RELATIONSHIP,”
Journal of Monetary Economics, 38, pp. 215-220.
5. Mork, Knut A. (1989), “ OIL AND THE MACROECONOMY WHEN PRICES GO UP AND DOWN: AN
EXTENTION OF HAMILTON’S RESULTS” Journal of Political Economy, 91, pp. 740-744.

6. Y. Chee Yin , L. Hock Eam, A. A. Golam Hassan (2009), “THE IMPACTS OF OIL SHOCKS ON
MALAYSIA’S GDP GROWTH. Proceedings of the 5th Asian Mathematical Conference, Malaysia 2009.

7. http://www.economywatch.com/world-industries/oil/oil-price-subsidies.html

8. http://www.economywatch.com/world-industries/oil/oil-prices.html

9. http://finance.isixsigma.com/index.php?option=com_k2&view=item&id=4526:malaysia