The Malaysian Insider, July 17, 2010
JULY 17 — The decision by the federal government to increase the prices of sugar, gas and petrol as the first step of its gradual subsidy rationalisation programme is sure to irk the people, especially those in the low-income group.
There will certainly be massive bitter resentment and anger among the people, especially when the Ramadan month cum Hari Raya Puasa, the month-long Hungry Ghost Festival, the Mid-Autumn or Mooncake Festival, and the Kew Ong Yah (Nine Emperor-Gods) Festival are just around the corner. Many Chinese also hold their weddings during the auspicious Mid-Autumn Festival period.
Obviously, the price-increase move will cause a domino effect on the economy, sparking a rise in prices of other goods and services, especially in the food and transportation sectors.
The move is also expected to cause some major political repercussions for the Barisan Nasional, especially with the impending Sarawak state election, which must be held before the end of the year, and a possible general election early next year.
The timing of the price increase announcement, just a few hours after Parliament adjourned its latest sitting, has also cast uncomplimentary aspersions on the Najib administration for wanting to avoid an open debate by the country’s lawmakers on such a vital issue.
The federal government has described the cuts as part of a difficult but bold decision to reduce fiscal deficit, and said that it would still have to spend RM7.8 billion on fuel and sugar subsidies this year.
According to a statement from the Prime Minister’s Office, the subsidy rationalisation would allow the federal government to reduce its expenditure by more than RM750 million this year.
The so-called savings through the cut in subsidies will surely become a point of contention as the people are upset that they have to suffer the increasing cost of living while the government spends hundreds of millions on what they perceive as non-essential things, such as the mega building projects and the purchases of defence equipment.
There had also been massive wastage of public funds, such as the Port Klang Free Zone (PKFZ) fiasco, which arose after the cost to develop the massive 400-hectare integrated cargo distribution hub spiralled from RM1.9 billion to RM4.6 billion.
Then there is the mega purchase of two France-made Scorpene submarines. According to figures supplied to an MP in Parliament by Defence Minister Datuk Seri Ahmad Zahid Hamidi, total costs, excluding annual maintenance, works out to €1.34 billion or RM6.7 billion. This breaks down to €969 million for the two submarines, €219 million for missiles, €38 million for miscellaneous equipment and €114 million for commission paid to the middle-man company Perimekar. Maintenance fees were originally agreed at RM600 million for six years or RM100 million per year. However, this has been increased to RM270 million per year.
Sure, the people will support the government in what it has described as the “long-needed” economic reforms to help the country maintain the strong growth it had achieved to become a developed and high-income nation.
But the people also want responsibility, competency, accountability, transparency, and authenticity in the Barisan Nasional government’s stewardship of the hard-earned tax money they contribute to the nation’s coffer.
Although Prime Minister Datuk Seri Najib Razak has promised that the government would adopt an approach that would not burden the people when implementing the subsidy rationalising plan, the truth is that the move will certainly result in an inflationary economic environment, with a general increase in the prices of goods and services, and the people who will be hit hard most will be the low-income families.
The government has argued that those that benefit most from the subsidised items are the businesses which used twice as much subsidised sugar than households, and owners of luxury cars who enjoy cheap fuel although they could afford unsubsidised prices.
Of course, those in the privileged class will not feel much impact from the cut in subsidies, and they will go on enjoying their upmarket lifestyle with nary a care for anything.
The poor, however, will have to tighten their already tight belts to make ends meet. As it is, many are just living from hands to mouths, with nothing left in their bank accounts before the end of the month.
It is anticipated that the ah longs will be doing roaring business, especially among the small petty traders and hawkers who will find it hard to survive in a tight market situation with their regular customers cutting their spending.
By making a general blanket withdrawal of subsidies, the government is causing much hardship to the low-income families who form the majority of the country’s population.
The so-called subsidy rationalisation to curb the wrong beneficiaries, wastage and abuse is like a machine-gun shooting at all, and those who get hit are those who couldn’t afford the bullet-proof vests.
I propose that the federal government take the following three measures to help relieve the financial difficulties of the low-income people:
The move to increase the prices of sugar and fuel is surely the unkindest cut for the poor. But, if Najib and the Barisan Nasional implements the measures I proposed before the next general election, I guarantee that the Barisan Nasional will return to power with a landslide majority. — mysinchew.com
* This is the personal opinion of the writer or the publication. The Malaysian Insider does not endorse the view unless specified.
There will certainly be massive bitter resentment and anger among the people, especially when the Ramadan month cum Hari Raya Puasa, the month-long Hungry Ghost Festival, the Mid-Autumn or Mooncake Festival, and the Kew Ong Yah (Nine Emperor-Gods) Festival are just around the corner. Many Chinese also hold their weddings during the auspicious Mid-Autumn Festival period.
Obviously, the price-increase move will cause a domino effect on the economy, sparking a rise in prices of other goods and services, especially in the food and transportation sectors.
The move is also expected to cause some major political repercussions for the Barisan Nasional, especially with the impending Sarawak state election, which must be held before the end of the year, and a possible general election early next year.
The timing of the price increase announcement, just a few hours after Parliament adjourned its latest sitting, has also cast uncomplimentary aspersions on the Najib administration for wanting to avoid an open debate by the country’s lawmakers on such a vital issue.
The federal government has described the cuts as part of a difficult but bold decision to reduce fiscal deficit, and said that it would still have to spend RM7.8 billion on fuel and sugar subsidies this year.
According to a statement from the Prime Minister’s Office, the subsidy rationalisation would allow the federal government to reduce its expenditure by more than RM750 million this year.
The so-called savings through the cut in subsidies will surely become a point of contention as the people are upset that they have to suffer the increasing cost of living while the government spends hundreds of millions on what they perceive as non-essential things, such as the mega building projects and the purchases of defence equipment.
There had also been massive wastage of public funds, such as the Port Klang Free Zone (PKFZ) fiasco, which arose after the cost to develop the massive 400-hectare integrated cargo distribution hub spiralled from RM1.9 billion to RM4.6 billion.
Then there is the mega purchase of two France-made Scorpene submarines. According to figures supplied to an MP in Parliament by Defence Minister Datuk Seri Ahmad Zahid Hamidi, total costs, excluding annual maintenance, works out to €1.34 billion or RM6.7 billion. This breaks down to €969 million for the two submarines, €219 million for missiles, €38 million for miscellaneous equipment and €114 million for commission paid to the middle-man company Perimekar. Maintenance fees were originally agreed at RM600 million for six years or RM100 million per year. However, this has been increased to RM270 million per year.
Sure, the people will support the government in what it has described as the “long-needed” economic reforms to help the country maintain the strong growth it had achieved to become a developed and high-income nation.
But the people also want responsibility, competency, accountability, transparency, and authenticity in the Barisan Nasional government’s stewardship of the hard-earned tax money they contribute to the nation’s coffer.
Although Prime Minister Datuk Seri Najib Razak has promised that the government would adopt an approach that would not burden the people when implementing the subsidy rationalising plan, the truth is that the move will certainly result in an inflationary economic environment, with a general increase in the prices of goods and services, and the people who will be hit hard most will be the low-income families.
The government has argued that those that benefit most from the subsidised items are the businesses which used twice as much subsidised sugar than households, and owners of luxury cars who enjoy cheap fuel although they could afford unsubsidised prices.
Of course, those in the privileged class will not feel much impact from the cut in subsidies, and they will go on enjoying their upmarket lifestyle with nary a care for anything.
The poor, however, will have to tighten their already tight belts to make ends meet. As it is, many are just living from hands to mouths, with nothing left in their bank accounts before the end of the month.
It is anticipated that the ah longs will be doing roaring business, especially among the small petty traders and hawkers who will find it hard to survive in a tight market situation with their regular customers cutting their spending.
By making a general blanket withdrawal of subsidies, the government is causing much hardship to the low-income families who form the majority of the country’s population.
The so-called subsidy rationalisation to curb the wrong beneficiaries, wastage and abuse is like a machine-gun shooting at all, and those who get hit are those who couldn’t afford the bullet-proof vests.
I propose that the federal government take the following three measures to help relieve the financial difficulties of the low-income people:
- (a) Those earning less than RM50,000 a year should be exempted from paying personal income tax.
- (b) A family of three or more with an household income of less than RM30,000 should be given a cost-of-living allowance (Cola) of RM200 a month for each schooling child or disabled dependent of the family, and each non-working old folk above 60 years old.
- (c) All those who have reached the mandatory retirement age, but are still working should be exempted from paying personal income tax. These people have been paying income taxes all their working life and they deserve a respite to enjoy their sunset years.
The move to increase the prices of sugar and fuel is surely the unkindest cut for the poor. But, if Najib and the Barisan Nasional implements the measures I proposed before the next general election, I guarantee that the Barisan Nasional will return to power with a landslide majority. — mysinchew.com
* This is the personal opinion of the writer or the publication. The Malaysian Insider does not endorse the view unless specified.
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