Raising the prices of essential goods and services would only reduce the subsidy bills marginally, says the DAP
According to Muhyiddin, the subsidy burden is expected to increase from RM10.32 billion to RM20.58 billion this year, of which about RM18 billion goes to fuel-related subsidy.
Muhyiddin said these subsidies could not be sustained at the same amount.
Pua, however, questioned why the overwhelming bulk of the projected RM18 billion of fuel-related subsidies are “given to companies with lucrative concessions earning billions of ringgit in profits annually”.
Pua, the Petaling Jaya Utara MP, pointed out that the current price of a barrel of crude oil was near US$100 per barrel, comparable with 2008’s average price of about US$92 per barrel.
“In 2008, based on Petronas annual reports, gas subsidy granted to independent power producers (IPPs) amounted to RM8.1 billion, while Tenaga Nasional Bhd took RM5.7 billion. Based on these international comparisons, our electricity prices should be at least 26% cheaper.”
Pua said that raising the prices of essential goods and services enjoyed by all Malaysians would only reduce the subsidy bills marginally.
“For example, the 5-in-1 subsidy cut last year would only result in savings amounting to RM750 million, while a 20% cut in subsidies to IPPs alone will save RM3.6 billion.”
The 5-in-1 cut last year raised the prices of sugar, petrol, natural gas and petrol, in what Prime Minister Najib Tun Razak called “upward price adjustments”, which saved the government RM750 million.
Government efficiency
Pua also said DAP supported Umno Youth chief Khairy Jamaluddin’s call to cease further subsidy cuts in the light of the increased burden of rising food prices.
“Khairy is absolutely correct to point out that the cost of fulfilling government guidelines for economic activities was RM17 billion per year, which is 21 times the savings from subsidy cuts for sugar and oil-based goods in July 2010 and 14.4 times for the same cuts in December last year.”
The government should do more instead to improve government efficiency and accountability to help reduce expenditure and trim the budget deficit,” Pua said in a statement today.
Muhyiddin said on Monday that the government could no longer maintain the current subsidies, signalling the inevitability of price hikes.
This comes hot on the heels of the most recent 20 sen increase in sugar prices, the fourth such increase in 18 months.
Malaysia’s low purchasing power, coupled with rising prices, is putting pressure on the Najib administration to pump public funds into existing subsidies.
The move is seen as necessary to avoid public unrest over the escalating cost of living, as well as counter Pakatan Rakyat’s attacks on the government’s previous plans of phasing out subsidies.
Najib said on April 1 that the recent surge in the cost of living may force the government to slow subsidy cuts, and that while the government was committed to reducing the nation’s deficit, “we don’t want rising prices in Malaysia to be a major burden for the people”.
Outflow of funds
For Klang MP Charles Santiago, the minimum wage scheme should be given priority.
He said that the World Bank had reported that 34% of the Malaysian workforce earned less than RM700 monthly, which is below the RM720 poverty line benchmark.
“The minimum wage should be set between RM1,500 and RM2,000 monthly. If the government does not provide a proper social safety net before revising the subsidy, the poor and the middle class will suffer,” Santiago said.
He added that between 2000 and 2010, Malaysia only experienced a wage increase of 2.6% while the cost of living had skyrocketed over the years.
“We also need to stop corruption and illegal outflow of funds. Our household debt stands at 76%, which shows that our people are borrowing to pay for their living.
“If this persists, it will create a mess in our country that will even drive investors away,” he said.
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