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Saturday, 29 May 2010

Remove subsidies gradually

The Star
PETALING JAYA: The withdrawal of subsidies for sensitive items that affect the lower-income group should be done over a longer period, said Tan Sri Ramon Navaratnam.

The Centre for Public Policy Studies at Asian Strategy and Leadership Institute (Asli) head said although he welcomed the move, five years was too short to soften the blow.

“Subsidies for sensitive items like sugar, flour and cooking oil should be withdrawn over as longer a period as possible,” he said yesterday.

On Thursday, Minister in the Prime Minister’s Department Datuk Seri Idris Jala proposed the withdrawal of subsidies for eight areas over five years.

Idris, who is also Performance Management and Delivery Unit chief executive officer, said the Government would be able to save RM103bil by withdrawing those subsidies.

Navaratnam said the management of subsidy withdrawals should be done in tandem with other aspects of the nation’s economic management. “We have to consider the mismanagement and wastage of public funds to ensure efficiency and productivity in government delivery.”

He also said it would be unfair to do this without compensating the people with better transport, housing, healthcare and education facilities.

Meanwhile, Bernama reported Transport Workers Union secretary-general Datuk Zainal Rampak as saying that doing away with subsidies on items such as flour and cooking oil would burden the low-income group.

He also called for a better deployment of subsidies for certain items and not abolish them altogether.

Fomca adviser Prof Datuk Hamdan Adnan said the Government should put in place a strong justification before cutting the subsidies so as not to burden the low-income group.

“The Government should not hastily implement subsidy reduction,” he said, adding that the Government should also monitor any increase in prices arising from the move.

The Malaysian Muslim Consumers Association supported the subsidy reduction, with executive secretary Datuk Paduka Nadzim Johan saying it could spur productivity and overcome reliance on subsidies.

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