Subsidy Cuts will be good for Malaysia


May 29, 2010

http://www.themalaysiainsider.com

Subsidy cuts will be good for Malaysia

The proposed subsidy cuts are turning out to be a political football but experts are more optimistic, saying they would boost competitiveness and appeal to foreign investors.

Dr Yeah Kim Leng, chief economist for RAM Holdings, said the long-overdue subsidy rationalisation plan had come at the right time. “The Malaysian economy has, in a way, rebounded so the implementation would not be that burdensome to the people,” he said.

“With inflation below the trend level of 3 per cent, the price impact will not exert a major concern because it will not result in runaway prices.”

He cited three major benefits of subsidy reforms, the first of which was greater efficiency gains overall.“Subsidy savings, instead of supporting consumption, can be directed to productive spending such as education, R&D, healthcare and public transportation,” he said.

The second benefit would be enhancement of the efficiency of the economy.“As we move closer to market prices, supply and demand becomes more market-responsive [and are] driven by price signals,” he said.

Yeah contended that this will allow transport services and basic food industries to be more competitive. “They will become more efficient because they will respond more efficiently to price changes,” the economist said, arguing that non-subsidised prices for goods and services will force resources to be allocated with minimum wastage.

The third and final benefit would be a more resilient economy, strengthened by lower fiscal deficit and government debt. “The lesson of the ‘Greek tragedy’ is quite stark and very relevant in our current context,” he warned.

“We will [need to] build up our fiscal bullets in order to face future shocks,” Yeah said, with the understanding that a resilient economy will be able to withstand jumps in oil prices or even a global recession.

He pointed out that the government does not have the resources at the moment to engage in counter-cyclical spending, saying that greater fiscal resilience will give it more flexibility to do so. Yeah explained that the removal of subsidies will also reduce macro-imbalances, which are of “major concern” to foreign investors. “Domestic investors will also lose confidence in the economy if debt levels build up,” he added.

Tan Sri Dr Ramon Navaratnam, a former Finance Ministry deputy secretary-general, also welcomed the cuts, saying they will do the economy much good.

“Finally, reality has set in… This will definitely have a positive and constructive effect on the economy and the future prospects of Malaysia’s socio-economic and political stability.

“The reduction of subsidies can be painful but it is necessary otherwise the economy will fail and decline.” He said subsidy reform will boost confidence in the economic management of the country and make it more appealing to foreign and domestic investors.

“These more realistic policies will encourage them to look at Malaysia’s economy as a good prospect in the long term and not only the short term.”

He added that the removal of subsidies will aid sustainable development and help maintain our standing in the IMD Competitiveness Index at a high level. Navaratnam also took the opportunity to criticise the “old NEP (New Economic Policy) mentality”, which he said was not positive or competitive enough.

“The subsidies syndrome, which is not only present in the price of commodities but right through the system, will take a heavy blow. [This will help] improve the mindset of Malaysians.”

He called the subsidy mentality a “cancer” that must be treated drastically. “If you don’t do [this] you will die in the long term… For too long we have neglected these basic problems in economic management,” he said.“That is why it is so difficult now to try and reduce what you gave so generously without good reason.”

Navaratnam also cautioned against Datuk Seri Idris Jala’s recent apocalyptic warning about the state of the country’s budget deficit, saying Idris might have exaggerated its severity.

“He has taken the situation as static when, in fact, while debt can be high, it is a proportion of the GDP that matters,” Navaratnam said.

“He has to take into account that the economy will be growing in its budget revenue and balance of payment receipts… The proportion of debt servicing to GDP need not be as dismal as he claims it out to be.”

Yesterday, the minister in the Prime Minister’s Department had warned that Malaysia risked ending up like Greece if it did not stop “living beyond our means”, noting that the country could go bankrupt by 2019 if the government continues spending on subsidies at the current rate of 12.5 per cent a year.

However, Navaratnam said: “Nevertheless, his warning is well taken and the image of Greece could well be adapted as a possible scenario if we continue with the subsidy mentality in overall economic management.”

54 thoughts on “Subsidy Cuts will be good for Malaysia

  1. It is time for us to remove subsidies and other distortions in the price mechanism. It will be painful initially but we all can adjust in the long term interest of our economy. But as I have said before, we must be fiscally responsible so that funds available as result of the removal of subsidies are properly utilised. Wastages and leakages can be managed and controlled if we are more transparent and accountable in the use of tax revenues.–Din Merican

  2. TS Navaratnam’s analysis is more cogent, while Yeah’s is elitist – basically because he forgot about the heavy handedness of our political masters.
    Effect on inflation while we actually in stagflation? Don’t ask..

  3. Din, Collectively, all possible suggestions have been given to the UMNO/BN government. We all know that the root of the problem is corruption. Until we solve the corruption problem, no amount of good measures will be able to contain the alarming rising debt. You cannot fill the barrel, if the big hole is not plugged! Its very obvious to me that the only way to save our country is to boot out the UMNO/BN government. This government is the one who has put us in this cronic situation and they are addicts to corruption. There is no way they will self medicate.

  4. Habib RAK : Your point about corruption is spot on. Without tackling this menace our country is never going to make it. I would go further – plug wastage effectively and the government can INCREASE subsidies.

    Next to corruption? DEBT, which is living beyond your means and cannot be sustaned. Ask any country that goes under…

  5. The government should not be talking about cutting down on subsidies in the first place , not when massive wastage of public funds is a fairer assesment to better determine the depleting national coffers.

    The government should be bold enough to admit the actual caused of its diminishing wealth and therefore come up with plans to curb corruption and wastage which is so rampant and blatant as reported annually by the Auditor-General.
    and should refrain from passing the burden to the rakyat.

    While cutting down subsidies on fuel and staples would certainly have an adverse effect especially on the hardcore poor there is no gurantee that the government coffers will not continue to haemorrhage due to lack of prudent spending, transparency and accountability.

  6. Subsidy my arse !

    The government is taking the easy way out.
    The rakyat has been taxed till they are bone dried already as it is.
    Why don’t you tell the government to demand that all the UMNO/BN slum lords return all the billions they have stashed overseas of what they have stolen from the rakyat !
    It makes more sense for the government to stamp out corruption and especially, to go down hard on the inept and corrupt customs officers that have allowed all our subsidized stables and commodities to be smuggled out of the country.
    In any case, the removal of subsidies will certainly spell the death knell for the government at the next GE.

  7. “Navaratnam also cautioned against Datuk Seri Idris Jala’s recent apocalyptic warning about the state of the country’s budget deficit, saying Idris might have exaggerated its severity.”

    During recession, talk of a balanced budget is nonsensical. It is all about how you finance that deficit. Tapping the domestic capital market could lead to inflationary pressures with rising interest rates and a soaring cost of domestic borrowing. A soaring cost of domestic borrowing will mean a disincentive to investment.

    It is a classic Catch-22.

  8. Subsidies?? The problem with subsidies is that it tends to become permanent and because it represents a distortion of free market forces, the economy becomes less efficient and tax payers end up having to bear the cost of this inefficiency in the production and distribution of goods and services.

    You have to see the big picture.

  9. Subsidies must go, there is no question about it. The major concern is, how and who is going to monitor and manage the funds available through the cutting of the subsidies. The general public is more concern about the corruptions, leakages and wastage and wanted it to be controlled first before taking action of cutting subsidy. Can we leave it to the present leaders where in the eyes of the public are mostly corrupted.

    Remember the huge fuel increase during Badawi’s time when he promised that the saving of 4billion will be put into a special account and will only be used to improve the transport system. What happen to this 4billion and how is the transport system today?

    Many are trying to blame the resistant to the subsidy cuts as political, I do not think so. It is a fact, that corruptions, leakages and wastage must be fully tackled first.

  10. “The second benefit would be enhancement of the efficiency of the economy.“As we move closer to market prices, supply and demand becomes more market-responsive [and are] driven by price signals.”

    What about social justice? Malaysia has been big on the economics of re-distribution of wealth. Too big.

    On the other hand, a laissez-faire economy and over reliance on Adam Smith’s invisible to do the job has not saved the U.S. from a recession.

  11. This talk of subsidy is a bad reflection of the government of whether our political leaders know their elbows from their arse holes
    It would have made more sense that subsidies were removed during the good times. Removal of subsidies now, will work only if it is offset by stable employment, increase in income and a stable inflation rate .
    It is bloody obvious that the present subsidies are no longer sustainable only because the government has proven incapable of improving our trade deficit and most importantly,to curb corruption as well as to bring about radical reforms to cut down government expenditure in the public sector – to trim off the excess in the grossly bloated and inept civil service, to focus in qualitative instead of quantitative management and efficiency of its performance.

  12. Cutting the size of the civil service?? Tell me about it. We forget that the government has been for years the largest employer, offering jobs to new entrants to the labor market every year including unemployable local graduates not absorbed by the private sector.

    Too much emphasis is laid on paper qualifications. Blue collar jobs are still being shunned in favor of white collar ones.

    Cutting down the size of the country’s bloated civil service is an easy call but hard to make. Revolutions don’t just happen. They happen when educated minds are left idle to plot them.

  13. Correction. Please read as …the government has proven incapable of improving our trade balance by reduction of our trade deficit..

  14. More urgent than the issue of size, is the issue of the civil service having long lost its neutrality. The doctrine of civil service neutrality is key to a good functioning government.

  15. “Cutting down the size of the country’s bloated civil service is an easy call but hard to make.”
    So is corruption, unfair taxation, unequal distribution of wealth, oppression , etc, etc…
    Perhaps the only way to improve the ills of the nation is by revolution to remove all the deadwood that persists not to go away.
    The only alternative is to vote for an alternative government but will it change the status quo ???

  16. How is the PKR government doing in Selangor? For years, civil servants are made to measure their performance in how well they express their loyalty to the party running the government. Suddenly they find themselves facing new masters whose political ideology works counter to that of their former political masters. This raises the issue of sabotage of government goals from within.

  17. I agree totally that neutrality of the civil service is crucial to the effective implementation of policies in opposition states but the issue still stands that the civil service inefficiency has to be addressed now, not later.

  18. Ask Bulbir’s country men, and we think this is all chapati talk with plenty of ghee. You must always have a budget surplus so that when the rainy days come, we can use it to revive the economy. That is the philosophy of the Sikh. That is why we are good moneylenders. Even a jaga can lend money to a Malay pegawai. What do you think, Dr. Bean?

    If you can”t afford to pay for patrol at the non-subsided price, then you should not own a kancil…just naik bus lah atau jalan kaki. We Malaysians are a pampered bunch. Jangan action sangat. اچھا اندرونی نظام بہت ضروری ہے. یہ سبق ہم نے سیکھنے کی ضرورت ہے.

  19. …in addition to GLCs we now have GLEs. Being government linked economists, the tag team of RAM and RAMon sure know how to use their textbook economics to keep their bread buttered on the right side. No one can argue against their logic. But reality in bolehland is far, far different.

    The easiest targets are the sitting-duck rakyat. Just shut off the subsidy tap. What can they do? More difficult to check your incompetent, wasteful, inefficient friends and cronies who seem to think their high lifestyles are their birthright and national coffers belong to them.

    And stop using fancy arguments like comparing to Greece and Ireland and the other PIGG nations and threatening people with the bankruptcy bugaboo. The correlation is both spurious and dishonest. Greece et al are a diffferent ball game altogether. The problems there stem from trying to impose a one-currency system across countries as different as bananas are from budu. Our problem set is different.

    Removing inefficiencies from the system alone would generate enough revenue through savings to keep the nation well afloat. Other countries also have subsidies and debt, the US is a good example. Yet their economies thrive.

    So lets not look for the easy way out. Longer term solutions are needed. Otherwise if removing subsidies fail to stem the haemorrhage, as it will if other profligate ways are not addressed, options will become less. You cannot milk the general public forever.

  20. Yes, Mr Bojangles, good governance and good housekeeping. Retrench civil servants to improve productivity and reduce the size of our Cabinet and their hangers-on.—Din Merican

  21. “I agree totally that neutrality of the civil service is crucial to the effective implementation of policies in opposition states but the issue still stands that the civil service inefficiency has to be addressed ..” ocho

    Civil service loss of its neutrality is but an aspect of that ‘inefficiency’.

    Let’s get real here. Do you think UMNO would retrench and re-structure and rationalize the civil service if it means adding to the pool of unemployed high school and college graduates. The loss of jobs and the alienation felt by this most vocal and influential constituents in Malay dominated constituencies in turn would translate into votes for the opposition. They are not stupid. This is what the opposition wants.

    Far from restructuring and rationalizing its bloated civil service, UMNO is buying their votes through bonuses and increased pensions. The message is clear. A vote for the opposition would mean losing your jobs. Unless of course we are to expect that once the opposition becomes the ruling party it intends to renege on its promises.

  22. Rent seeking, corruption and subsidies require the same sort of snafu mentation. There is no doubt that all must go away in tandem. Possible? Yes, but improbable – so long as there is perpetual affirmative action gone wrong.

    The civil service is only part of the problem. The leakages big and small, are too massive to sustain. Gynaecologists call this DUB. The country suffers from chronic anemia and sooner or later bleeds to death. Removal of subsidies are just a temporary tamponade. The cause has not been addressed.

    Btw ocho, we are not suffering from trade deficit at the moment. We are suffering from sheer mismanagement, megalomania and incompetence.

  23. “Subsidy Cuts will be good for Malaysia”

    MAY BE FOR THE TIME BEING, THE GOVT. CAN SHELVE THESE IDEAS UNTIL THE RM 270 BILLION SPENT DURING TUN ABDULLAH TENURE AS PM. IS ACCOUNTED FOR.

  24. I do not understand all this talk of cutting subsidies. Take education as a case in point. I know of a student who enrolled in a 6 semester Diploma Course in one of our so-called universities. The fee per semester is RM7,000 or RM42,000 for the whole course. The student was lucky to get a Loan from ITPN. The shock was when he got the bill. Repayment was over a 30 year period beginning with RM100 on an escalating scale. Total payment with interest RM84,000. Now, not so lucky.That Diploma holders at best can get a job that may be Pays RM1,400.

    So cal any one tell me where is the subsidy?

  25. Bean, this flur is a more than a disaster. He can’t help it, he’s dense, irrational and illogical. No polite intercourse possible. Ignore.

    Thumb Logic, ‘wrong colour’ and no connections, izzit? I’ve contributed much more than a mil RM to foreign countries for my kids’ education, no subsidies either. But we are not talking about education per se, but the subsidy mentality that borders on ‘entitilement’. We wouldn’t mind if the withdrawal of subsidies went to better educational oppoturnities/facilities, healthcare and socio-economic nets, but there is no possibility of this happening. The Pemandu is drunk.

  26. Din,

    This is basically a done deal i.e removal of subsidies. Since it will require ordinary Malaysian citizens to change their life style, why not PM and his cabinet ministers lead by example by cutting down their excesses such as unnecessary overseas trips, no spouse is allowed to accompany and limit the number of entourage. At least people will feel that the government are really with the people and understand the pain that most Malaysians are suffering. Having the celebrity chef and flown all the way from England to serve vegetarian food to PM is not going to help the government image.

    The other thing is DS Najib needs to excuse himself from holding the Minister of Finance portfolio. The country really need a finance architect to take us out from this predicament. It adds credibility and show government seriousness to solve national debt problem.

    This is about national survival. No time for politics.

  27. “Let’s get real here. Do you think UMNO would retrench and re-structure and rationalize the civil service if it means adding to the pool of unemployed high school and college graduates.
    The loss of jobs and the alienation felt by this most vocal and influential constituents in Malay dominated constituencies in turn would translate into votes for the opposition. They are not stupid. This is what the opposition wants.” Mr.Bean

    I think you already know the answer your self. But it still remains that they have to deal with the issue sooner if not now , rather than later.
    No, what the opposition wants is that the government will impose the removal of subsidies to spell their doom and to let the bloated civil service to continue festering till it bursts like a putrefied abscess.
    If the government is smart, it will address the issue where the problem lies by introducing strong incentives for civil servants to go for early retirement- say, at 50 years of age if they do not pass an exam, they cannot work till 55, or whatever the pension age is ; or alternatively, do like what the private sector does to phase out a redundancy package similar to a VSS.
    This will be a more acceptable policy and less damaging than an across the board policy like the removal of subsidies . The former affect and incur the displeasure of only a segment of the civil servants whereas the later incurs the wrath of every one !

    “The country suffers from chronic anemia and sooner or later bleeds to death. Removal of subsidies are just a temporary tamponade. The cause has not been addressed.” – Menyalak-er

    Agree with you 100 per cent on that, mate. The problem is that the government itself is the bloody problem, not the solution !!!

    Looks like one way of solving the problem is to remove them all together ! 🙂

  28. I don’t know what the hell most are talking about!!

    Included in the $74 billion are:
    1.$10 billion Govt debt servicing
    2. $5 billion pension cost
    3. $6 billion cost of MARA, UITM, UPM etc
    4. $1 billion 1 off GIFT to KLIA

    These ARE NOT SUBSIDIES.

    Other than those for petrol, cooking oil, flour and rice the rest of the $74 billion is not subsidy.

    PM Rosemajib and Jala are using red herrings to distract and confuse us from the real issue – the complete UMNO/BN mismanagement of our economy resulting in a record national debt of $362 billion!!

    And if they stop farting around and re-negotiate 1 sided croney contracts awarded to IPPs, toll highway operators, water monopolies and downsize the civil service by 5% to start with, that will contribute about $80 billion over the next 5 years ($16 billion a year)!!

    If Asas Serba could make a $50 offer for ALL toll cos with 7.5% guaranteed dividend with no toll increase forever, then we can see how much (billions) we have been ripped off by Mahathir and the toll mafia!!

    IPP’s cost Tenaga a whopping $13 billion a year, toll highways $4.6 billion and the Civil Srvice of 1.2 million M’sians, a staggering breath-stopping $42 billion!! And don’t forget the Auditor General said that corruption costs us $28 biliion a year!!!! There’s more excess fat in the GLc’s, Khazanah, PNB etc.

    It’s not rocket science. A 1st year Uni econs student could figure out what needs to be done. 1st sack this PM, his advisors and his thieving Govt – it’s not our Govt for sure!!

    dpp
    we are all of 1 race, the Human Race

  29. donplaypuks – May 30, 2010 at 12:18 am

    Thanks for the stats. 🙂
    The staggering amount speaks for itself – RM42 billion to upkeep an inefficient, under productive and bloated Civil Service !
    Imagine how much will be saved just by trimming off, say, 10 x 3 percent of that amount by stages through phased early retirement / VSS plan.
    But instead, the government chose the across board, easier option in order to protect its own interests as well as its cronies, to pass the burden on to the rakyat by cutting subsidies to raise RM52 billion ( RM74-RM22 billion )

  30. BTW, the amount collected from the toll highways , I assume goes to the cronies pockets and if so, how much of it goes back to Inland Revenue ?

  31. There are no less than 17.0 million unemployed Americans as we speak and their numbers are rising and not reducing. The Obama administration is providing grants to the qualified unemployed so they could go back to school. This is nothing more than disguised unemployment.

    The states are shedding excess white collar jobs because they are no longer able to pay. Thousands are losing their jobs if they have not already lost them. My son is working for a non-profit organization and feel secure about his job but even he is not spared the effect of a buyers market He is doing the work of two IT staff (network associates) with the promise of a promotion but the budget is just not there. The wife is going back to school to read for her masters.

    I may also go back to school to learn to count sheep so I could sleep at night.

  32. There are no less than 17.0 million unemployed Americans as we speak and their numbers are rising and not reducing. The Obama administration is providing grants to the qualified unemployed so they could go back to school. This is nothing more than disguised unemployment.”

    Smart move !
    Perhaps the same needs to be applied to Malaysia’s Civil Service. Apart from early retirement option, get rid of those who have a poor performance record and if those among them who are eligible , give them a second chance to upgrade their skills or to retrain to other job sectors .
    The ones who are sacked can go on unemployment assistance till they find a job while those who are eligible to upgrade their skills will be given study grants.
    Imagine how much the government will save – the difference between paying say, 100 x full employment wages and 100 x job seeker’s assistance, considering both options can be considered “gaji buta” anyway.
    The study grants will not be wasted as it is an investment for the future to meet the needs of the job market when the economy picks up later after the recession.

  33. Over here it is a free labor market.

    No racial and no redistribution of wealth issues etc. Employees are offered severance pay packages and the older ones retired off early. Employers then look to the temp agencies to fill the vacancies left by these ‘early retirees’. They pay less for the same job and with no benefits. This way they get to cut costs.

    This doesn’t happen in Malaysia. Worker productivity is high over here. Americans work very hard with little left for leisure. They play hard too. Worker productivity in Malaysia is low with lots of public holidays.

  34. A small caveat. Certain industries are unionized and trade unions can be very strong and are unwilling to take sacrifices when times are bad unlike those in Japan.

  35. YKL & NAVARATNAM’S ARGUMENTS ARE DIRECT FROM THE TEXT BOOK, ESPECIALLY FROM ADAM SMITH, BE HOLISTIC THERE IS STILL A NEED FOR SUBSIDY ESPECIALLY TO THE POOR LIKE PETROL AND FOODSTUFFS…..DON’T GIVE SUBSIDY TO THE RICH ( IPP & TOLL OPERATORS , THEY ARE FILTHY RICH ALREADY)…AND DISTORTION & MISMANAGEMENT IN THE ECONOMY SHOULD BE ERADICATED. SO NO BIG HURRY TO REMOVE THE SUBSIDY, RATIONALISE IT, ….REDUCE THE MALPRACTICES AND MISMANAGEMENT FIRST AND THE ECONOMY WILL SOON BE ON THE STRONG FOOTING, WHY YKL AND NAVARATNAM ARE NOT HIGHLIGHTING THIS…….

  36. APPOINT YM TENGKU RAZALIEGH AS FINANCE MINISTER AND HE WILL DO THE REST…….GIVE HIM AND THE COUNTRY A CHANCE…..

  37. PAK LAH RAISE PETROL PRICE IN 2007, GOVT SAVED 4 BILLION IN SUBSIDY AND PROMISED TO IMPROVED THE PUBLIC TRANSPORT SYSTEM, WHAT HAPPEN???ANYBODY CAN RESPOND????

  38. LOOK AT INDONESIA , SHE IS NOW IN THE BRIC LEAGUE NOW , YOU KNOW WHY ???LESS CORRUPTION AND CRONYISM…….

  39. What needs to be drummed into the civil servants are that the days of freebies where they can get paid for sitting on their asses are over and to stop treating the national kitty as their grandfather’s !

  40. Those were the economist’s and capitalist’s way of philosophical and tactical thinking. What about the ordinary rakyat’s way of thinking with all simplicity. To them, subsidies is their right and not merely a gifts from the very people, to whom they had entrusted their resource rich country to be managed and secured for and on their behalf. You called it subsidies but to them, the rakyat, it’s their shares from the resources and produce of their own beloved nation.

  41. This is something I picked up on Rocky Bru’s blog. It is written by Mustapha Ong:

    Corruption is the mother of all evils.In the words of J.V. Langmead Casserley, “Because men are everywhere corruptible and always corrupted,no man or group of men can be trusted with too much power and indeed with no power at all which is not balanced or checked by the power of other men”.

    All responsible citizens are concerned about the abuses of political power that had been in this nation for the last 53 years. No man is perfect but politicians are the worst culprits who are corrupt everywhere for the sake of seeking power in order to suppress the weaker rakyat and enrich themselves, families and cronies.

    Our leaders and the civil service have been in the era of corruption for the last few decades and it is not easy to change their attitude,due to the social pressure,increasing cost of living and beyond that the freedom that we and they enjoyed.There are too many areas of entertainment including gambling outlets, massage and reflexology centers and screw joints that are easily available to the public.

    We are now obsessed and living in a decadent society with all those ill-gotten wealth, which will destroy the soul of present and future generations.This is due to the uncontrolled greed for wealth, social status and excessive freedom.

    Legislation of laws and institutions will not work, without the cooperation of the people.We need to change the mind set of those corrupt leaders and those who are deeply indulged in corrupt practices,without conscience and fear for God.

    Malaysians had been living under the protected zone of comfort for far too long and it will take some time to cushion the shock of withdrawal of subsidies.The average Malaysians do not even know that the government had been subsidising our cost of living for so long based on a number of reasons, including the perpetuation of political power.

    The withdrawal of subsidies can only be effective if our economies are sound and managed with ethics and responsibility like what Singapore is doing. Thailand could have succeeded if they enjoy real political,economic and social stability.

    In the case of Malaysia, our past political leaders were too concerned about their political staying power and were not in a position to enforce stringent laws to curb corruption they themselves were also corrupt to the core. Why didn’t they practise what they had preached and adopt fair, reasonable and inclusive policies across the board, and not those based on race?

    DEP/NEP or NEM are good and effective economic models based on sound macro-economic management, but the systems including quotas and privileges had been abused by irresponsible officials as well as those who are under the patronage of powerful politicians.

    Malaysians are ready to accept the withdrawal of subsidies but not at one go.Certain items such as sugar,flour, rice, cooking oil,utilities,transport,basic educational providers and medical services should continue to enjoy subsidies,until we can create a strong higher income group through the increase of wages, etc.

    The government should proceed with the withdrawal of subsidies and effectively reduce rampant corruption.We need to have the courage to change and support government policies and initiatives without or favour.

    No need to change the government of the day, whose confidence we have been enjoying as the oppositions under the present leaders are no better.It’s the better of the two evils, one of which is the lesser one that will lead us to better days ahead through a fair,reasonable and responsible execution of policies guided by human values and equality.

    The majority Chinese should not be despair as they continue to create wealth, but the Malays need to get rid of their subsidised mentality and be less dependent on government hand outs and bail out syndrome which they had created themselves.

  42. Its a catch 22 situation here, withdraw subsidies, the malpractices in governess will continue unabated.
    The malpractices must be addressed first, then economy will stabilized when people are happy and secured then withdraw the subsidy slowly. But is the present subsidies are for the benefit of people or benefiting the malpractices and bad governance? why should the people be penalized for things that they did not do? their only crime was to trust the government. Obviously the government has betrayed this trust.

  43. “There are too many areas of entertainment including gambling outlets, massage and reflexology centers and screw joints that are easily available to the public.”

    As an employee working for ‘Screws, nuts & bolts Corporation’ Tean has been screwing every day because that is just part of his job description.

    If you mean ‘health centers’ euphemism for whore houses, they do a public service. After a hard day in the office, you need to re-charge your batteries.

  44. “The majority Chinese should not (be) despair as they continue to create wealth, but the Malays need to get rid of their subsidised mentality and be less dependent on government hand outs and bail out syndrome which they had created themselves.”

    dinobeano – May 30, 2010 at 9:07 pm

    That can’t be true. Of course all will be affected. The low income earners will be joining the poverty line while the Malaysian middle class that the government has perceivably created will be diminished without subsidies.
    No subsidy cuts without removal of corruption and leakages. Period.

    At the very least, subsidy cuts will work only if there is stable employment, increased income and manageable inflation rate – the very lack of which were among the chief causes for having subsidies in the first place.

  45. Sometimes i wonder where ( top end or bottom end ) people like Ramon and Yeah have their brains . Don’t they have the ” balls ” to call a spade a spade ? Must they always be so apolitical and polite ?

    Don’t these two goons know that if monies like the rm 540 million paid to Razak Baginda as commission , the funds siphoned via the PKFZ project etc is saved , then the poor in the country can continue to enjoy some subsidies?

    The distortations in Malaysia’s economy cannot be all attributed to subsidies alone . I am sure commonsense alone tells us the greater distortations is caused by corruption and not the cost of subsidies .

    Wonder when these two goons are going to get real .

  46. The problem with free marketeers is that they see legislation as interferences and interferences in the free market system in their opinion cannot be good. The introduction of subsidies is a distortion of free market forces at work and therefore cannot be good. The truth is ‘subsidy’ in terms of what it can do to the economy, is both good and bad. You just need to know when to resort to subsidies. And when you do that you must come prepared with an exit strategy.

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