KUALA LUMPUR — The government, which is expected to spend RM24.93 billion on subsidies this year, remains committed towards subsidy rationalisation.
However, it will continue to subsidise education, health, and critical services such as rural air and train services, said the finance ministry in the 2010/2011 Economic Report.
“The poor and disadvantaged groups will continue to receive assistance through strengthening of the social safety net.
“The impact of subsidies will be closely monitored to ensure that it does not lead to adverse market distortions and misallocation of resources,” it said.
It said allowing market mechanisms to determine prices and output will lead to better allocation of resources, reduce wastage and increase efficiency.
The process will be measured and gradual to have a minimal impact on consumers and businesses as well as contain inflationary pressures.
Savings from the subsidy rationalisation for 2010 will be used to further improve education, health and community development, the ministry said.
Fuel and sugar were initially targeted as fuel subsidy, being the largest component at 40.1 per cent in 2010, will have the greatest impact on government finances, while higher price of sugar will curb consumption leading healthier lifestyles.
Malaysian Chronicle
16/10/10
However, it will continue to subsidise education, health, and critical services such as rural air and train services, said the finance ministry in the 2010/2011 Economic Report.
“The poor and disadvantaged groups will continue to receive assistance through strengthening of the social safety net.
“The impact of subsidies will be closely monitored to ensure that it does not lead to adverse market distortions and misallocation of resources,” it said.
It said allowing market mechanisms to determine prices and output will lead to better allocation of resources, reduce wastage and increase efficiency.
The process will be measured and gradual to have a minimal impact on consumers and businesses as well as contain inflationary pressures.
Savings from the subsidy rationalisation for 2010 will be used to further improve education, health and community development, the ministry said.
Fuel and sugar were initially targeted as fuel subsidy, being the largest component at 40.1 per cent in 2010, will have the greatest impact on government finances, while higher price of sugar will curb consumption leading healthier lifestyles.
Malaysian Chronicle
16/10/10
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