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BN stands for Barang Naik for poor rakyat

There are two categories of subsidy, one is subsidy for companies like natural gas for IPP and TNB, and another one is subsidy for essential goods like sugar, rice, cooking oil, etc.

No doubt subsidies have to be cut and reduced for less distorted market price, eliminate smuggling of subsidized goods and stop leakage to benefit foreigners.

The rationalization of subsidy has to be prioritized based on its impacts on state financial coffer and welfare of poor rakyat.

>> As pointed out by many politicians and economists, independent power plants IPP operators are the main beneficiary of government subsidy with 18.9 billion is channeled to them last year to over produce 40-50% excess electricity which is wasted and drained to earth.

>> Rent-seeking procurement and project tender processes have cost taxpayers at least 20 billion a year.

>> Prudent spending and tight control on budget will easily save another billions.

>> BN government has to stop spending hundred billions on wasteful white elephant projects.

Subsidy cut on essential goods and fuel should be the last option after above measures are taken by the government. The impact of subsidy cut on essential goods is more widespread and affecting more people especially on lower income group with no social safety net to rely on.

Subsidy cut on essential goods is a small parcel compared to several dozen billions of wastage and leakage in the government budget.

I agree subsidy cut on essential goods is unavoidable, but countermeasures on how to mitigate its impacts on 40% poor rakyat with household income of less than RM 2000 a month are still no yet committed and released by BN government.

BN is punishing poor rakyat through subsidy cut on essential goods and condoning cronies who steal billions of public money each year.

Thank to BN for giving “Barang Naik” in our rakyat daily greetings.

First round of cuts

PETALING JAYA: The Govern-ment has begun its first round of a gradual subsidy rationalisation programme, promising it would have minimal impact on families.

Describing the cuts as part of a “difficult but bold” decision to reduce fiscal deficit, the Government said it would still have to spend an estimated RM7.8bil on fuel and sugar subsidies this year.

Thus, effective today, prices of petrol, diesel, liquefied petroleum gas (LPG) and sugar have increased following a reduction of the subsidy.

Sugar is revised to an additional 25 sen per kg to RM1.90. LPG is up 10 sen per kg to RM1.85.

Petrol RON 95, RON 97 and diesel have gone up by five sen per liter. For RON 97, the Government has decided to withdraw the subsidy later and subject it to a managed float, where the price will be determined by an automatic pricing mechanism.

“This subsidy rationalisation will, according to estimates, allow Malaysia to reduce Government expenditure by more than RM750mil this year,” a statement from the Prime Minister’s Office said yesterday.

Details of the changes are available on the websites of the Prime Minister’s Office and Pemandu.

The Government also said the “long-needed” economic reforms would help Malaysia maintain the strong growth it had achieved to become a developed and high-income nation.

“We have begun a planned and fair reform of a subsidy regime that for too long has been ineffective in helping those who need it most and, over time, has become a barrier to Malaysia’s progress,” the statement read.

The prices of fuel and sugar in Malaysia would still be among the lowest in the region, it said.

It also said the Government made the decision about the subsidies following robust consultations with the people, citing the thousands of Malaysians who took part in policy labs and Open Day.

“As with subsidy reform, the Budget, the Government Transformation Programme and the National Key Economic Areas, the Government has made a determined effort to engage the public, listen and learn, and then act in the best interest of the nation,” it said.

Although Malaysia had weathered the global recession well, the Government said the country could not achieve its ambition to be a high-income nation by simply managing through a crisis.

“As the Government has consistently said over recent months, we must also implement subsidy reforms that will remove distortions in the marketplace and enable us to better target our resources on those most in need, and on investments that will provide lasting benefits for Malaysians.”

It assured that the savings from the reforms would allow for resources to be better channelled for families, communities and business growth.

“Measures such as the 1Malaysia clinics, the 1Malaysia mobile clinics, as well as the scholarships for all 9A+ and deserving students – specifically those who have done well, but come from lower income families – are made possible by such reforms,” it said.

There were three main concerns which led to the subsidy rationalisation: wrong beneficiaries, wastage and abuse.

The Government also said that businesses used twice as much subsidised sugar than households, while owners of luxury cars enjoyed cheap fuel although they could afford unsubsidised prices.

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