Subsidy Rationalization: Time to Let Go

I attended that Subsidy Rationalization Lab Open Day held at Kuala Lumpur Convention Center with Becca. I expected an exhibition but I didn't expect to see the following individuals discussing the subsidy reform plan for Malaysia: Datuk Seri Idris Jala (CEO, PEMANDU), MP Tony Pua, & Mr. Azman Mokhtar (MD, Khazanah Nasional) among others (I confess, I can't recall their names :p).

I entered late but I got the gist of the forum:

1. We need to remove subsidies
2. How to remove subsidies? How long will it take? Which ones should go 1st?
3. Despite the subsidy removal, we must ensure that the welfare of the poor is protected.

I don't have all the statistics but RM3.1billion for food (flour, sugar, cooking oil) is WAY too significant for us to ignore. Our prices for sugar is RIDICULOUSLY low (the lowest in ASEAN, in fact), the subsidies are effectively beneficial to the industry & smuggling of OUR sugar across borders to OTHER countries is rampant. Time to order teh tarik kurang KURANG manis & to cut out them sugary drinks & kuih. Diabetes is on the rise & we COULD use a little less sugar in our meals.

The government has subsidized our school fees, exam fees & even textbooks! I remember during my school years, whenever mom complained about having to fork out money to buy books, it wasn't a pinch on the family budget. I think at this point of time, we can't take education for granted. It shouldn't be a free ride if we can afford it. Many middle-income families can certainly afford primary & secondary education. I say we should keep the subsidies for poor & low-income families where the subsidies would not go to waste.
As for tertiary education:
  • The university fees for international students are significantly lower than in other neighboring countries. No offense, but I'm sure we don't NEED to subsidize foreigners when we have a lot of local kids needing financial help!
  • One of the options provided at the exhibition is to provide private places in public universities: meaning allow students to join & pay the full amount of the fees (zero subsidy). This is a good measure, when the university has paying students, it has to improve its facilities & the quality of the education.
  • The fees will increase by RM800 for technical courses (engineering, medicine etc) & RM500 for non-technical courses (accounting, social science etc) to start off the subsidy removal process.
  • I think we need to reform the allocation system. Despite the government saying that the racial quota is no longer in place, the reality is otherwise. We have students with poor entry qualifications gaining places in public university while others with stellar academic achievements are turned away. We need more transparency & not just in university allocation but also for scholarship awarding. I believe scholarships should be given to students who are having financial difficulty & race/religion should NOT be a factor to give away taxpayers' money without justification.
Fuel & Electricity
If I heard it right, the amount of gas in Malaysia isn't enough to fuel the entire country so we still rely on coal-fired power stations for most of our electricity. I've discussed this topic with friends countless times:
  • Improve public transport & provide fuel subsidies for our buses & trains.
  • The poor rarely have cars; some don't even have motorbikes! Here we see the largest consumers of fuel are the middle-class to upper-class Malaysians.
  • Tony Pua: in Klang, every baby will have a car. Think about that.
  • Malaysia is becoming a car country, which means the government can't sponsor each family cheap fuel.
  • Remove road tax. It's an unnecessary cost once people stop to drive that much as the result of fuel price liberalization.
Households utilizing RM20 & less of electricity do not have to pay for it = RM14+million last year. When you consider the fact that the average household is using more electricity (a home entertainment set & PC center is the norm today), that's a LOT of subsidies.

What Malaysia needs is the subsidy reform. We cannot survive with such a huge budget deficit & we don't want to turn into Greece. This has been said many times, but the government needs to take charge & ensure that the people TRULY come first & that the time to perform is NOW. I certainly hope that Malaysia will still be a good, if not better, place for my children to grow up in & this can only be possible if we see past our greed & get down to making things right.


aMMerZ said...

is it rationale to reduce/abolish the subsidies scheme of petrol in the year of rebuilding of malaysia's economic?

How far our country making money so far instead of losing some billions to the delayed projects, lost both L & M blocks to brunei (didn't mentioned in any medias) n more??

instead of that, with unstable political issues, our leaders are totally lack of skills to develop country or are they feel, malaysia is totally "safe" if the economic grow just 2-3% instead of other developed countries who grow alots than us????

clearly, the current government LOST so much "duit rakyat" in other things. Compare to mahathir's era, we can still reach the "develop country" title even we pinched by downturn economic of 1997, but now it seems hopeless.

instead of abolish/reduce subsidies, what else they can do to help RAKYAT who in needs??
can RAKYAT afford to face this reality especially poor & middle income groups?? can u imagine how much it will increase price of the other basic items such as rice, sugar,ticket bus n more??? even student's scholarship can't afford to cope with it (the current one).

the government surely think it's easier than done n they didn't learned from the past.

Rowan said...

I heard that the reason why we're in an economic dump is BECAUSE of Mahathir's policies. Now he's complaining that we need to remove the subsidies or be bankrupt. Who put the subsidies there in the 1st place?

I think the gov has no choice, I don't see any other viable alternative to reduce unnecessary burden on our economy.

The current government may not be a stellar one but any other government would see that subsidies need to go.