Subsidising Malaysians

The Government is going back to the people on its plan to cut subsidies, which ballooned to a staggering RM74bil last year.

Malaysians will have a chance to have their say in an open day organised by the Government this Thursday to gather feedback on the inevitable reduction in subsidies on items including sugar and petrol.

The open day on subsidy rationalisation will be held at Hall 4 and 5 of the Kuala Lumpur Convention Centre from 9am to 2pm.

Subsidies - the total of which averages RM12,900 per household every year - will have to be gradually cut beginning this year, which is then expected to affect the prices of petrol, natural gas, food, medication, toll and healthcare.

The huge sum in subsidies has resulted in Malaysia having cheaper cooking oil, flour and sugar than Singa-pore, Indonesia and Thailand.

The open day is similar to the ones held last year for the Government Transformation Plan.

“Cutting subsidies is a foregone conclusion. The question is not about the amount of reduction, but the technique of reducing,” said a high-ranking official.

Recommendations from the Perfor-mance Management and Delivery Unit (Pemandu) subsidy rationalisation lab will be publicly displayed during the open day.

The lab will then re-examine the findings based on the feedback before making a final recommendation to the Prime Minister.

An analysis from the lab, made available to The Star, stated that it was important to act immediately if the country were to reduce the subsidies gradually.

Otherwise, it said, the Government might end up having to remove subsidies in bigger increments as Treasury reserves ran lower. It also argued that the current mechanism of subsidising was no longer sustainable as government debt was at RM362bil last year or 54% of the GDP.

That is much higher than Indonesia's 28%, and is approaching The Philippines' at 62%.

“In five years, we may reach 100% if no changes are implemented,” said a source familiar with the issue.
There is no need to panic, however, as the Government will continue to provide assistance in critical fields such as education, agriculture and fisheries, healthcare and welfare.

The main aim is to reduce wastage or abuse, mainly due to the subsidies being passed on to the wrong beneficiaries or over-consumption.

“Why should the people in Sabah and Sarawak subsidise for toll that is mainly used by people in the Klang Valley? Also, foreigners are enjoying the RM1 consultation fee at government clinics. That has to be addressed,” said the same source.

It is understood that one of the lab's proposals is to raise medical consultation from RM1 to RM3, thus keeping the fee affordable to all.