Thursday, July 15, 2010

All must help cut subsidies

We cannot be in denial mode any longer if we want to remain economically viable.

DATUK Seri Idris Jala found himself facing a barrage of criticism, and even a demand for him to be sacked from the Cabinet, when he said the country risked going bust if our Budget continued to be in a deficit.

Many of our politicians prefer to put on the blinkers and pretend that all is rosy and fine in Malaysia, and assume that we are still ahead in the region.

Here’s the bad news. We may have gotten out of the recession and the Prime Minister has taken bold initiatives to make things work but we’ve got to get out of this mindset.

The first quarter result of the economy is good and Datuk Seri Najib Tun Razak’s momentum must be supported and continued, even if it seems radical.

If tough measures have to be taken, then we have to bite the bullet together.

Since 1998, Malaysia has been operating on a deficit budget with the national debt increasing at 12% annually.

Even when the prices of petroleum and palm oil rocketed in 2003, we still ran a deficit budget, lacking the political will to put things right.

To do this, the Government has to cut subsidies, which amount to RM74bil annually and include subsidies for sugar and petrol.

Seriously, why should Malaysian taxpayers pay for your love of sugar, which is bad for your health, or the petrol for your three cars?

But many middle-class Malaysians, many of whom find themselves with little left to save after the monthly income tax and EPF deductions, also want the burden to be shared.

It must be a shared responsibility. It’s frightening that only over one million people pay income tax and they have to shoulder the huge responsibility.

Despite the reservations and objections, the Goods and Services Tax (GST) has to come into place for the net to be wider.

But if we wish to continue convincing Malaysians of the need to slash subsidies, they cannot be hearing about plans to spend RM800mil for the construction of a new Parliament building in Putrajaya or RM812mil for a new palace.

They cannot be blamed if they compare Malaysia with England where Westminster and Buckingham Palace, which are much older, are still being used.

It’s a relief to hear the Prime Minister saying that the proposed Parliament building is merely at a discussion level and it would depend on the availability of public funds.

No one, regardless of our positions, should be spared from keeping the country’s kitty tight.

If we are struggling to pay our bills, stop acting like a rich man, for God’s sake.

Buildings are supposed to be functional and not for cosmetic purposes.

Whether it’s the Parliament or state legislative buildings, the elected representatives only meet a few times a year, so it is unforgivable to spend huge sums for such buildings.

Our politicians can try to convince us that these are iconic structures but Malaysians are not in the mood to buy these stories.

There is also a need to look at purportedly private projects which are in reality subsidised by the public, especially independent power producers, toll concessionaires and water companies.

Jala has said that indirect subsidies amounting to RM56bil have been dished out.

Malaysians also need to be assured that the withdrawal of subsidies would be gradual.

In fact, it’s only a reported RM2.6bil to RM15.7bil by 2015.

Giving rebates for electricity bills, or even not charging those using below 100KW, is being considered, for example.

But while we consider reducing our subsidies, we also need to urgently step up our competitiveness in the region because foreign direct investments (FDIs) have been lacklustre while major local companies are investing abroad, where they believe that there are better growth opportunities.

Some have chosen to list their companies in Singapore and Hong Kong. Regionally, Vietnam and Indonesia have become attractive, especially the latter where investors now find the atmosphere less stifling.

We need to kickstart ourselves.

The New Economic Model should push through these programmes if we are serious.

The impression is that there are politicians who still want to keep the old ways even if they retard growth, and are seemingly prepared for short term gains at the expense of the country’s future.

We are slacking and underperforming. There is no point talking about ethnic equity distribution if the cake isn’t growing.

Yes, we have to endure the subsidy cuts because there’s no option anymore. The Government has to do it but it needs to also cut down on the excesses and waste as a result of incompetence or corruption.


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