‘Targeted subsidy system needs to be modified’
THE targeted subsidy system is the way to go for the country and federal government must put in the effort to study an effective mechanism to ensure that assistance is provided to those who need it.
National Consumer Advisory Council chairman Mohd Azmi Abdul Hamid said the system was not a new approach, but it needed to be modified.
He said this was to ensure that the subsidies reached the correct groups, particularly the Bottom 40 per cent (B40) group.
A blanket subsidy for Malaysians, he added, was not beneficial to the country as it would create a disparity between the rich and the poor.
“I am agreeable to the targeted subsidy system, but with the condition that we have a detailed mechanism to define those who fall into the B40 and other categories. The government has taken the right step towards implementing targeted subsidies.
“For the B40 group, aspects such as the components that make up their expenses must be studied so that the subsidy resolves the problems faced by it.
“If we do not look at their consumption and cost of living pattern, we cannot sustain the targeted subsidy economically and fulfil their needs, and we will continue to have problems.”
He said the implementation of the system must be looked at from other aspects too, such as their needs and localities, as a person who falls under the B40 group in Shah Alam differs from, for example, one in Sungai Petani, Kedah, or Gua Musang, Kelantan.
Azmi said this at a discourse organised by Sinar Harian titled “Targeted Subsidies: Yes or No?” at Kompleks Karangkraf here on Tuesday.
Moderated by Kota Buku chief executive officer Sayed Munawar Sayed Mohd Mustar, the other panellists were Malaysian Institute of Economic Research executive director Professor Emeritus Dr Zakariah Abdul Rashid, Petroleum Dealers Association of Malaysia president Datuk Khairul Annuar Abdul Aziz and Setiawangsa member of parliament Nik Nazmi Nik Ahmad.
In the two-hour discourse, the panellists agreed to the targeted subsidy system, with Zakariah saying that it should be made an economic instrument that tells what it is for, its aim and whether it can resolve the problems of cost of living or income distribution.
He said this could be done by profiling B40 consumers in different regions after which simulation could be carried out to gauge the results and the benefits of the subsidy given.
However, he said it would be an uphill task for the government.
“We want to encourage more people to use public transport rather than private vehicles. The subsidy is used as an economic instrument. What we can do is make public transport cheaper. Subsidies are meant to influence and change consumers behaviour. We can use subsidy to achieve what we want.”
However, he said, the government should refrain from giving too much subsidies for popularity as it would result in the need to fork out more money, and eventually the nation would become and unproductive one.
Khairul Annuar said he supported the targeted subsidy system, adding that following feedback from industry players on the right mechanism, it was up to the government to decide which worked the best.
He said there were concerns from dealers in terms of operations and mechanisms, such as using MyKad or fingerprints would cause a lag in operations at petrol stations or those who fall in the B40 group but do not qualify for the subsidy.
“Pre-qualifications should first be done to avert any conflict at petrol stations. With pre-qualifications, we do not have to worry about who is qualified. We do not want situations where our employees (petrol station employees) are scolded by customers.
“The pre-qualifications must be integrated with the Road Transport Department and the Inland Revenue Board of Malaysia to determine that one is qualified.”
He said the readiness of petrol stations depended on the government’s proposal, adding that operations could be swift if an existing infrastructure was used.
He said the government must ensure that the system is effective to deter any abuse of the subsidy.
Nik Nazmi said when it came to dishing out subsidies, the government must weigh its priorities.
“Subsidies for universities, schools and hospitals are critical as these are the sectors that are valuable and we need to defend them.
“We need to heighten subsidies that promote the ease of working such as fuel, public transportation and nurseries as Malaysians face the problem of having to take care of their children.
“The European culture of encouraging public transportation can be used in Malaysia as it is more sustainable to the environment, too, instead of the American way which is pro to the use of petrol and anti public transportation due to its geography.”