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The most stupid policy in this world is subsidizing fuel with public fund


20130406-232809

Malaysian taxpayers have to bear for at least RM7.0 billion subsidy leakages to the diesel and petrol smuggling to foreign countries in a year according to Maybank research unit. Besides, the International Monetary Fuud (IMF) meanwhile also estimates that 80% of fuel subsidy is enjoyed by the top 40% high-income group.

Although with a total RM24.8 billion is budgeted for fuel subsidy in 2014, but only RM3.5 billion fuel subsidy is projected to benefit low income people after taking into account the leakages in fuel smuggling.

In reality only 14.1% of fuel subsidy is benefiting low income group, 28.2% subsidy is lost to smuggling and remaining 57.7% subsidy is enjoyed by 40% high income group who have more and bigger capacity vehicles.

The proposed fuel multi-tier pricing for targeted group system with MyCard is not going to work out in Malaysia because of the lax enforcement and smart consumers who will exploit the system. There is also the administration hassle of implementing the new system.

We do not need to hire foreign management consultants to devise an effective and easy fuel rationalization program. All the BN government requires is the strong political will to abolish all kinds of fuel subsidies immediately and re-channel one third of saving to the rakyat through BRIM.

The BRIM beneficiaries will then be able to collect RM1200 for a household and RM600 for a bachelor in the targeted low income group as promised in BN’s general election manifesto without draining the limited resources from the treasury coffers.

The remaining 2/3 saving in fuel subsidy cut that will amount to about RM16.5 billion can be better used for nation development projects or budget deficit reduction purpose.

An extra RM500 cash reimbursement on top of promised BRIM handout should able to help the poor people to absorb the ensuing inflation in the first year after the fuel subsidy cut.

Our government is too kind to “subsidize” foreigners directly and indirectly with our hard earned money. The wastage of taxpayer’s money must be stopped immediately.

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