Subsidy Issues – Your feedback needed (Update#1)

TRANSIT notes that the Malaysian government is now seeking to reform the current system of subsidies (including subsidies on petrol, energy, water, sugar, and various other commodities) as the collective subsidy bill has become “unsustainable”.

An advertisement printed in the news media recently states that the bill for subsidies cost the “government” RM74billion in 2009:

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A photo of the advertisement placed in Malaysian newspapers discussing the current subsidy situation. Image courtesy of @Shook983

According to the government, the breakdown of the subsidy is as follows:

RM74B = {RM42.8B health, welfare, edn/scholarships + RM23.5B fuel+ RM4.6B infra/toll+ RM3.1B food}

However, some consumer groups are questioning the description of payments for health, welfare & education as “subsidy” – arguing that these are responsibilities of the government and paid for by taxes collected from Malaysians.

Star Graphic on current fuel consumption & the petrol subsidy

The government has directed the “Performance Management & Delivery Unit” (Pemandu) to investigate the current subsidy situation and come up with solutions. As such, Pemandu opened up a “Subsidy Rationalisation Lab” and they will holding a “Subsidy Rationalisation Lab Open Day” on May 27th to share the results of their lab. You can also give them feedback by sending an email to subsidy@pemandu.gov.my

What: Subsidy Rationalisation Open Day
When: 27th May (Thursday) from 9:00am – 2:00pm
Where: Kuala Lumpur Convention Centre (KLCC)
Why: Er…..do you really want to ask?

Articles:

Letters:

TRANSIT Says:

We have, as you can imagine, been very busy recently so we have not managed to give this issue its due coverage. However, we know that the subsidy of petrol is an intrinsic part of the public transportation issues that we face today – and removal of that subsidy (and dealing with the subsidy of diesel) will be a painful, necessary and all-around annoying part of the solution to improve public transport.

Of course, we are not naive enough to suggest that removing or reducing the petrol subsidy will encourage a marked shift to public transport use; frankly, our system is too far gone to see an overnight shift and most people would probably bear the increased cost of petrol (and resulting increase in the cost of just about everything) and express their anger through letters to the newspaper in the short term and the ballot box in the long term.

As you can imagine, unraveling the subsidy mess will take a lot of time, but we encourage the public to give as much feedback as they can to the government by emailing subsidy@pemandu.gov.my.

Also, please add your comments below and respond to our poll. Thank you!

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7 thoughts on “Subsidy Issues – Your feedback needed (Update#1)”

  1. The Govt. must make a serious attempt to recover the monies lost by leakages. When this total is determined then the quantum for or against subsidy can be finalised.
    There are so many reports of leakages but reports of its recovery is unheard of. Please deal with this first.
    This is the same principle as for water supply systems, where the NRW leakages are reduced before any consideration of a tariff raise.
    K Packianathan

  2. When talking about subsidy, please don’t forget about corruption in our country. From the total amount of RM74 mil, the pure subsidy of our country is just RM4 mil and the rest of RM70 mil is turn to pocket subsidy.

  3. I would agree to a certain extent if the government intends to cut subsidies on fuel. But before doing that, the government must ensure that our public transport is well managed. There must be lesser cars on roads. More people should use public transport instead of their own cars. However, looking at the condition of public transport now, the government should not blame the people for not using them. Only when the condition of public transport is improved, then the government can cut subsidies on fuel.
    P.S- I really do hope the government will not cut subsidies on food, education and healthcare. Because all these are essential for human beings.

    1. Saktish

      Thank you for your comment. It is already being argued that the amounts paid for education & healthcare (RM42.8 billion) should not have been included in the total for subsidies because health care & education are government responsibilities.

      As for food, I suppose it depends on which foods. For example, the subsidy on sugar has contributed to an epidemic of diabetes, while the subsidy on cooking oil has contributed to an epidemic of heart disease. Not to mention, the subsidy is encouraging smuggling to Thailand.

      TRANSIT would be very happy to see a reduced petrol subsidy, as well as reduced toll subsidy, with that money specifically directed to pay for investments in public transport.

      Regards, Moaz for TRANSIT

  4. If I recall correctly, a few years back when the government cut the subsidy on fuel (price shot up to RM2.8 per little), it was mentioned that the billions ringgit saved will be used to improve public transport.

    After all these years, what has the government done? As a prove, KTMB is still in the state of moribund.

    Cutting subsidies won’t do any good in this country because the money will go straight to the pockets of cronies or the so-called well connected parties.

    If the government is truly serious, the public sector should be taking the first hit. With a population of 22 millions, we have 1.2 millions public servants. For comparison, S.Korea has a 50 mil population but only 0.9 mil public servants. THIS IS A ONE HUGE SUBSIDY we are talking about.

  5. After all these years of hearing that we are always subsidised on almost everything, I think it is time that we put an end to this. Let’s say NO to subsidy! Let’s YES to responsibilities!
    When it comes to subsidy, it is not only the Goverment providing subsidies to the citizens. We must also talk about the subsidy that the citizens are providing to the government.
    Yes, we are actually subsidising the national car industry. The government chosed to protect the national car industry at no cost at all. The cost of protection is subsidised 100% by all of us who bought non-national cars with ridiculous taxes imposed on them. The national car buyers are also subsidising in terms of limiting their ability to buy other cars.
    So how about the government stop fuel and toll subsidies and the citizens stop subsidies to national car? I think it is very fair. We will pay higher for fuel and toll but we will pay less installment on our cars. All these subsidies need to be abolished gradually or else it will have a very negative impact on the whole economy.

    With regards to other subsidies in education and medical, I suggest the government treat it as part of its responsibilities. It should not incur losses nor at the same time profit from those services.

    If the above can be achieved I think we will end all discussions about subsidies.

  6. kerajaan shrusnya mneruskan subsidi trhdp rkyt .ini krana kerajaan mmpnyai lbhn ktipan cukai loteri atau cukai judi yg dikutip stiap thn…….krajaan xsharusnya mnggunakn cukai trsbut sbgai kgunaan yg tdk mnasbh..ini krana rkyt tahu mnilai mana yg baik dan mana yg buruk……….sekian wassalam………

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