By LIM SUE GOAN
Translated by Soong Phui Jee
Sin Chew Daily
Is the recent increase of sugar prices a start of the government's subsidy reduction agenda? Does it mean that we are now farther from the next general election?
The Performance Management and Delivery Unit (Pemandu) recommended on the Subsidy Rationalisation Lab Open Day last year that the government should gradually abolish subsidies in five years or the country could face bankruptcy in 2019.
Minister in the Prime Minister's Department Senator Datuk Idris Jala suggested to reduce subsidies for 12 items, including food and tolls. He also suggested that fuel prices should be raised by 15 sen from June last year. However, the government has not accepted the aggressive proposal. Instead, it adopts a more moderate approach to reduce subsidies based on the target groups.
The government only increased the price for RON95 by 5 sen on 15 July 2010 and even the international crude oil prices have reached US$110 a barrel, the price for RON95 remains at RM1.90. The authority has lifted the subsidies for RON97 and luxury cars. However, more and more motorists have chosen RON95 instead of RON97 and thus, government has failed to reduce subsidies. It is believed that this year's fuel subsidy would be increased to RM14 billion.
The implementation of subsidy system will surely bring loss of resources. For example, foreign syndicates collude with local fishermen and lorry drivers to purchase subsidised fuel, causing the country to suffer huge losses.
Although only Malaysian citizens are allowed to purchase RON95, the Domestic Trade and Consumer Affairs Ministry does not have enough officers to be placed at all petrol stations nationwide to prevent foreigners from purchasing RON95.
If fuel prices are increased in full, it will bring significant effects and inflation will certainly be exacerbated. This is the dilemma of the government.
Smuggling of subsidised necessities is also rampant in the country. Rice, cooking oil and flour smuggling activities in border areas have evolved into a thriving underground economy.
The government might increase sugar prices for the fourth time since last year by saying that it is for the people's health. However, people eat rice everyday and it will be difficult to increase rice prices.
The government is facing financial difficulties, so do the public. The inflation rate for March was 3% and if a man earned RM700 a month, RM21 of his salary has disappeared just like that. If the inflation rate raises to 5%, he would then lose RM35.
According to the Congress of Unions of Employees in the Public and Civil Services (Cuepacs), it is estimated that 20% of civil servants have to get a part-time or freelance job as they could not survive on their monthly salaries. Even civil servants who enjoy many benefits are suffering, let alone the public.
The implementation of the minimum wage system has been delayed and the Treasury has to temporarily sustain the pressure until the effects of the Economic Transformation Programme (ETP) take place. The subsidy reduction measure would be implemented when the national income increases. Cutting subsidies now will certainly cause public resentment.
If the BN wishes to hold the next general election at the end of this year or early next year, it must suspend the subsidy reduction plan. Also, reducing subsidies during economic hard time does not comply with the people-oriented ideology.
