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New Straits Times
a day ago
- Business
- New Straits Times
Petrol dealers' hidden burden
KUALA LUMPUR: Petrol station operators nationwide are seeing their profit margins from petrol and diesel sales increasingly eroded. A major cause for the margin erosion is the fees charged by banks and e-wallet companies on card transactions, according to an industry observer. While an increase in the national minimum wage to RM1,700 per month and rising energy costs are cited as among key contributing factors, the observer said the Merchant Discount Rate (MDR) imposed by credit card companies and e-wallet platforms may be quietly inflicting the greatest damage. MDR is a non-discretionary expense beyond the control of petrol dealers but it is not present in the original Automatic Pricing Mechanism (APM) of 1983, making it a substantial external burden, said Rahim Kamil Sulaiman. Rahim, who worked in the oil and gas sector since 1977, claimed that this trade practice denies retail entrepreneurs a fair share of profit. He shared that the issue is particularly pressing as digital payments now account for more than 90 per cent of fuel transactions. "For a credit card that charges one per cent per transaction, the MDR cost for RON95 at the pump price of RM2.05 per litre is 2.05 sen per litre. Since petrol is a controlled item, banks cannot impose the MDR cost on the consumer, as the pump price is the final price." At present, however, the burden falls on the station operator, cutting their margin by 2.05 sen per litre, or 13.7 per cent, the second-largest after direct labour costs, he said. Rahim said the erosion of 13.7 per cent of sales commission income is exceptionally high because this single cost item excludes operating costs such as direct labour, electricity and working capital. "These discretionary operating costs already reduce commissions by 48.1 per cent. Fixed costs, including management, administration and various other expenses, will further add to the business's overall cost. "High fixed costs and diminishing margins will mean that, in 2025 and beyond, the majority of stations will break even at rates higher than 70 per cent, with low-volume stations losing money every month at break-even points exceeding 110 per cent." He added that it is likely that the low-volume stations will deplete their hard-earned reserves within two years. Five months ago, Bumiputra Petroleum Dealers Association (Bumipeda) reportedly warned that over 75 per cent of Peninsular Malaysia's 3,500 petroleum station operators could lose more than RM100 million in 2025. Bumipeda cited a minimum wage increase to RM1,700 per month effective February this year and a potential increase in electricity tariffs in July as primamry reasons. Bumiputera entrepreneurs manage around 70 per cent of the national retail network, which includes both dealer-owned-dealer-operated (DODO) and company-owned-dealer-operated (CODO) stations. Cash Flow Trap Rahim noted that the petroleum retail industry, worth around RM60 billion annually, is a strategic component of Malaysia's political economy, with Bumiputera dealers controlling at least 70 per cent of the network. He said most station operators replenish stock with cash before or on delivery without receiving credit from oil companies or banks. "The dealer's cost is RM1.90 per litre, after deducting a 15 sen per litre margin as mandated by the government under APM, enforced under the Price Control and Anti-Profiteering Act (PCAPA). "The station operators need between RM100,000 and RM250,000 in working capital, depending on the station sizes. Banks (credit card providers) do not finance the operators' working capital or any other business operations to justify charging them a fee," he said. Rahim added that the government mandates petrol stations to keep sufficient stock to guarantee uninterrupted fuel supply at all times. He also noted that stock replenishment occurs frequently, typically every four days, which results in higher MDR costs for stations with greater sales volumes due to more frequent restocking. Rahim said to understand how station commissions are being eroded by the credit card system, consider the typical cash-to-cash cycle for a petrol dealer - the period between purchasing stock and receiving payment through sales - which averages just four days. "Given that MDR charges are typically around one per cent transaction, this translates to an effective daily rate of 0.25 per cent (1.0 per cent ÷ four days) applied to the pump price of RM2.05 per litre. "However, dealers only earn a fixed commission of 15 sen per litre. When the MDR is applied against the full pump price rather than the dealer's actual commission, the burden becomes disproportionately high. "Specifically:(0.25 per cent x RM2.05) ÷ RM0.15 = 3.41 per cent per day, which translates to 1,260 per cent per annum. "This means dealers are effectively absorbing an interest rate of over 1,200 per cent annually, despite having no control over the transaction fees or the retail price they must adhere to under the APM," he explained. By contrast, banks typically charge consumers less than 20 per cent per annum for credit card balances, with most base lending rates hovering around 12 per cent. "In this context, the rate borne by station operators is not just excessive - it borders on exploitative, especially considering the low risk to banks and the short cash recovery cycle involved," he said. Calls for Reform Rahim believes that the MDR cost should be borne by either the oil companies or the consumer, as both are effectively involved in the transaction. He said the government ought to revisit the fuel subsidy rationalisation programme in consultation with key stakeholders such as oil companies, petrol station operators and the price controller under Domestic Trade and Cost of Living Ministry, which holds sole authority over price setting under the Price Control and Anti-Profiteering Act. He added that the act should empower both the price controller and the Price Advisory Council to reassess the APM, particularly in light of major shifts in the petroleum retail landscape and currency fluctuations. "Fortunately, the present government has successfully strengthened the ringgit, which will countervail commodity price increases. "This positive note could facilitate a thorough review of the APM and fiscal measures necessary to target subsidies to those in need in a manner that addresses the economic problem most effectively, rather than imposing financial technology as a solution," Rahim said. Business Times has reached out to Petrol Dealers Association of Malaysia and The Association of Banks in Malaysia for comments. Meanwhile, an economist suggested that the issue of margin pressure by low-volume petrol stations due to MDR fees could be addressed by having credit card companies and e-wallet providers temporarily subsidise a portion of the fees. Universiti Kuala Lumpur Business School economic analyst Associate Professor Dr Aimi Zulhazmi Abdul Rashid said the temporary concession could be for two years, with the subsidy gradually reduced over time. "The providers aim to grow transaction volumes, so it is only fair they subsidise MDR costs using gains from the higher and rising volumes in urban areas," Aimi said. He added that smaller petrol stations actually benefit from cashless transactions by reducing risks such as handling petty cash, counterfeit or damaged notes, and employee theft. "From that perspective, the slight margin reduction that the petrol stations need to absorb may be worthwhile in view of the risks mentioned above," he said.
Scroll.in
5 days ago
- Politics
- Scroll.in
Karnataka: Several Muslim Congress leaders quit posts, cite failure to curb communal violence
Several Muslim leaders from the Karnataka Congress resigned from their posts on Thursday to protest the alleged failure of the state government to contain communal violence in the Dakshina Kannada district, The Indian Express reported. Those who resigned included Karnataka Pradesh Congress Committee General Secretary MS Mohammed and Dakshina Kannada District Minority Wing chief KK Shahul Hameed. The resignations came in the wake of the murder of a man named Abdul Rahim in Bantwal near Mangaluru on Tuesday. Rahim's friend and co-worker was also injured in the incident. On Thursday, the party leaders announced their resignations at an emergency meeting convened in Mangaluru's Bolara area, The Hindu reported. While the leaders had initially discussed waiting a few days for the response of the state government, party workers forced them to announce their resignations. During the meeting, Hameed told party workers that Chief Minister Siddaramaiah had urged the community leaders not to take any hasty decisions, adding that the matter had reached the party high command. However, the workers demanded that the leaders tender their resignation. The leaders, including several district and booth-level workers, then decided to quit. Hameed told party workers the Congress government in Karnataka had failed to rein in the Bharatiya Janata Party and Sangh Parivar's 'harassment' of Muslims even after the minority community had stood with the party during times of trouble, The Indian Express reported. 'Even our mothers, wives and children are asking why we are with the Congress when they cannot protect Muslims,' The Indian Express quoted the Congress leader as having said before announcing his resignation. The region has seen three murders over the past few weeks. On April 27, a 36-year-old man from Kerala named Ashraf was lynched in Mangaluru after he allegedly shouted pro-Pakistan slogans during a cricket match. On May 11, a Hindutva activist named Suhas Shetty was murdered. Eleven persons were arrested for the killing, The Indian Express reported. Shetty, who had five cases against him, was a prime accused in the murder of a person named Mohammed Fazil in Surathkal in July 2022. In Tuesday's incident, Rahim was killed while unloading sand near a customer's house, according to the newspaper. His friend and co-worker, Kalandar Shafi, was severely injured in the attack. On Thursday, the police said that three men, 21-year-old Deepak Poojary, 21-year-old Prithviraj and 19-year-old Chiranthan, had been arrested for Rahim's murder, The Indian Express reported. The reason for the killing was yet to ascertained.
Hans India
5 days ago
- Politics
- Hans India
Murder of labourer triggers political turmoil and outrage in coast area
Mangaluru: The murder of Abdul Rahim, a daily wage labourer in Bantwal taluk of Dakshina Kannada district, has sparked widespread outrage, triggering political resignations, accusations of communal targeting, and calls for urgent government action. Rahim, who was hacked to death earlier this week, was described by community leaders as an innocent man known for his secular values. A father and a peace-loving citizen, Rahim served as the General Secretary of his local mohalla committee and was an active member of the Sunni Students Federation of South India (SKSSF). He was reportedly attacked alongside another youth, who survived with serious injuries. Speaking at a press conference in Mangaluru, SKSSF State General Secretary Anees Kousari condemned the killing as a consequence of rising hate speech and unchecked communalism. 'This brutal act is not just a crime, it's a chilling message to the working-class people who live peacefully across communities,' he said. The organisation warned of widespread protests if the perpetrators and hate speech propagators are not swiftly arrested. The SKSSF also demanded Rs50 lakh in compensation for Rahim's family and announced plans to honour his memory with blood donation drives at 100 centres and interfaith prayer meetings across 300 branches in the district. Echoing similar concerns, the Social Democratic Party of India (SDPI) alleged that right-wing groups were responsible for the murder. At a separate press briefing, SDPI State Committee member Riyaz Kadambu criticised the silence of senior political leaders and questioned the government's apparent apathy. 'The DGP has not visited the district. Muslim MLAs have not spoken out. And the Chief Minister has yet to issue a statement,' he said. Kadambu also questioned Congress leader Dinesh Gundu Rao's comments suggesting the murder was due to personal enmity, saying it undermines the gravity of the situation. Adding to the political fallout, several Muslim leaders from the Congress party tendered their resignations during an emergency meeting at Shadi Mahal in Bolar on Thursday. M.S. Mohammad, State General Secretary of the Minority Cell; K. Abdul Rauf, District Vice-President; and former mayor K. Ashraf were among the prominent figures who stepped down, citing the state's failure to curb communal violence and its neglect of the Muslim community's concerns. The May 29 meeting was called to formalise protests against the state's handling of communal tensions, particularly Abdul Rehman's killing, which district minister Dinesh Gundu Rao attributed to personal enmity, a claim Ashraf dismissed, alleging misinformation by officials. The decision to begin resignations sent a clear message to the state government and Congress high command, setting a charged atmosphere for the meeting, where demands for accountability and swift action escalated into Hameed, President of the Minority Cell, informed that Chief Minister Siddaramaiah had sought a week's time to respond to their grievances.
Indian Express
5 days ago
- Politics
- Indian Express
Karnataka Congress Muslim leaders quit as anger over Dakshina Kannada murders grows
In more trouble for the embattled Karnataka Congress, several leaders of the party belonging to the Muslim community resigned from their party posts on Thursday, including KPCC general secretary M S Mohammed and Dakshina Kannada district minority wing president K K Shahul Hameed, over a spurt in communal violence in Dakshina Kannada. In the latest incident, Abdul Rahim was hacked to death in broad daylight in Bantwal near Mangalaru Tuesday, with a friend and co-worker left seriously injured. The Congress workers who quit have accused the Home Ministry, headed by G Parameshwara, of failing to curb communal incidents in the region. On Thursday, Chief Minister Siddaramaiah dropped in to meet Congress MLC B K Hariprasad, who hails from Dakshina Kannada, to discuss the situation in the district. Later in the day, the state government changed police officers across coastal districts. After several Congress minority leaders posted on social media that they would be resigning Thursday, minister Zameer Ahmed had tried to stop them, appealing to them to rethink. Ahead of an emergency meeting called by the Muslim party leaders in Mangaluru, there was speculation that the prominent faces may heed Ahmed's appeal and delay their resignation decision. However, at the meeting, the leaders faced much anger from workers, who slammed them for going back on their word, and sought justice for the victim. Finally, the leaders decided to go ahead and quit. Several district and booth-level workers also resigned. Addressing the gathering before he resigned, Hameed said though the minority community had stood with the Congress during times of trouble, the party's government in Karnataka had failed to rein in the BJP and Sangh Parivar's 'harassment' of the Muslim community. 'Even our mothers, wives and children are asking why we are with the Congress when they cannot protect Muslims,' he said. Hameed also talked about coming under attack from angry workers when they visited the hospital where Rahim was taken after the attack on him. Known to be a communally sensitive region, the Dakshina Kannada district is back on the boil after three murders in the past month. First, a migrant labourer, Ashraf, was lynched, following which a 'Hindutva activist' with several cases against him, Suhas Shetty, was killed. Two days ago, Rahim was hacked to death. After the latest murder, police imposed prohibitory orders in the district for the second time in a month and these will be in place till Friday. Police announced the arrest of three youths for Rahim's murder Thursday, and said they were looking for the other accused, adding that they did not know the reason for the killing yet. The three – Deepak Poojary (21), Prithviraj (21), and Chiranthan (19) – are residents of Bantwal taluk, and have been charged under Sections dealing with murder, attempt to murder and rioting, among others. Home Minister Parameshwara said the government was determined to ensure that the accused paid for their crime. A day earlier, the state government notified a 'Special Action Force' to curb communal incidents in the districts of Dakshina Kannada, Udupi and Shivamogga. Rahim, 32, was killed while unloading sand near a customer's house. Kalandar Shafi, 29, who was severely injured in the attack, is in the ICU. In the murder of Hindutva activist Shetty on May 1, 11 people have been arrested. Shetty, who had five cases against him, was the prime accused in the murder of Mohammed Fazil in Surathkal in July 2022. On May 19, one of the accused in Shetty's murder, Naushad, was pelted with stones in Mangaluru prison and was transferred to Mysuru jail.
Indian Express
5 days ago
- Politics
- Indian Express
Muslim Congress leaders quit in Karnataka as anger over Dakshina Kannada murders grows
In more trouble for the embattled Karnataka Congress, several leaders of the party belonging to the Muslim community resigned from their party posts on Thursday, including KPCC general secretary M S Mohammed and Dakshina Kannada district minority wing president K K Shahul Hameed, over a spurt in communal violence in Dakshina Kannada. In the latest incident, Abdul Rahim was hacked to death in broad daylight in Bantwal near Mangalaru Tuesday, with a friend and co-worker left seriously injured. The Congress workers who quit have accused the Home Ministry, headed by G Parameshwara, of failing to curb communal incidents in the region. On Thursday, Chief Minister Siddaramaiah dropped in to meet Congress MLC B K Hariprasad, who hails from Dakshina Kannada, to discuss the situation in the district. After several Congress minority leaders posted on social media that they would be resigning Thursday, minister Zameer Ahmed had tried to stop them, appealing to them to rethink. Ahead of an emergency meeting called by the Muslim party leaders in Mangaluru, there was speculation that the prominent faces may heed Ahmed's appeal and delay their resignation decision. However, at the meeting, the leaders faced much anger from workers, who slammed them for going back on their word, and sought justice for the victim. Finally the leaders decided to go ahead and quit. Several district and booth level workers also resigned. Addressing the gathering before he resigned, Hameed said though the minority community had stood with the Congress during times of trouble, the party's government in Karnataka had failed to rein in the BJP and Sangh Parivar's 'harassment' of the Muslim community. 'Even our mothers, wives and children are asking why we are with the Congress when they cannot protect Muslims,' he said. Hameed also talked about coming under attack from angry workers when they visited the hospital where Rahim was taken after the attack on him. Known to be a communally sensitive region, the Dakshina Kannada district is back on the boil after three murders in the past month. First, a migrant labourer, Ashraf, was lynched, following which a 'Hindutva activist' with several cases against him, Suhas Shetty, was killed. Two days ago, Rahim was hacked to death. After the latest murder, police imposed prohibitory orders in the district for the second time in a month and these will be in place till Friday. Police announced the arrest of three youths for Rahim's murder Thursday, and said they were looking for the other accused, adding that they did not know the reason for the killing yet. The three – Deepak Poojary (21), Prithviraj (21), and Chiranthan (19) – are residents of Bantwal taluk, and have been charged under Sections dealing with murder, attempt to murder and rioting, among others. Home Minister Parameshwara said the government was determined to ensure that the accused paid for their crime. A day earlier, the state government notified a 'Special Action Force' to curb communal incidents in the districts of Dakshina Kannada, Udupi and Shivamogga. Rahim, 32, was killed while unloading sand near a customer's house. Kalandar Shafi, 29, who was severely injured in the attack, is in ICU. In the murder of Hindutva activist Shetty on May 1, 11 people have been arrested. Shetty, who had five cases against him, was the prime accused in the murder of Mohammed Fazil in Surathkal in July 2022. On May 19, one of the accused in Shetty's murder, Naushad, was pelted with stones in Mangaluru prison and was transferred to Mysuru jail.
