Wee: Avoid burdening the people
Fuel subsidy revamp must be done cautiously in view of high cost of living
PETALING JAYA: Plans to restructure the fuel subsidy by next month must be done carefully to avoid burdening the people with price hikes, says MCA president Datuk Seri Dr Wee Ka Siong.
He said the restructuring should factor in all possible situations that the people might face, especially in view of the high cost of living.
This was to ensure a comprehensive plan and to avoid abuse, he said.
“I am worried about another round of price hikes when the subsidy is lifted.
“This will be the biggest challenge as more people will not be able to afford things.
“The government should be careful with this,” said Dr Wee, who was a guest at yesterday’s radio talk show, The Pulse of the Malaysian Chinese Economy by Chinese radio station 988.
He said fuel subsidy amounted to Rm30bil of last year’s Rm88bil total subsidy given out by the government.
With the subsidy, he said that fuel price here is RM1.20 per litre lower compared to global prices.
Economy Minister Rafizi Ramli affirmed last month that Malaysia would cut fuel subsidies this year to reduce the national fiscal deficit.
There had been much talk that this would take place in the second half of the year but Prime Minister Datuk Seri Anwar Ibrahim said on Sunday that the Cabinet had not finalised its decision.
Dr Wee said the government might source for funds by slashing subsidies or from the Sales and Service Tax (SST) collection, especially since it had offered civil servants a pay rise of more than 13% starting December, which would require an allocation of over Rm10bil.
He said the salary revision would be beneficial for civil servants but the government would need to fund these salaries.
“When the SST rate rose from 6% to 8%, only Rm3bil was collected while prices have surged.
“If we opt not to draw from the SST (collection), we will have to rely on subsidies.
“From subsidising RM1.20, we now need to allocate Rm10bil. Hence (the government may)
deduct one-third of the RM1.20 subsidy.
“So imagine if 40sen is removed from the subsidy. The immediate consequence will be a price increase across the board, leading to a significant challenge for the people,” he said.
Dr Wee said there was much public approval when former prime minister Tun Abdullah Ahmad Badawi announced a 25% to 35% salary adjustment for civil servants in May 2007.
However, when he subsequently raised fuel prices, public sentiment shifted negatively towards the government, Dr Wee recalled.
As such, he said it is essential for the government to handle the subsidy allocation system cautiously.
He also called for the restructured system not to leave out those who meet the criteria for subsidies.
“For example, small business operators in small towns or Chinese new villages usually have lorries for transporting goods.
“If these businesses are unable to access subsidised diesel, it is likely they will pass on the increased cost to consumers by charging higher prices for the goods,” he said.
Dr Wee also raised concerns about the use of identification documents such as Mykad or car registration to verify motorists’ eligibility for fuel subsidy.
“What happens when the son or daughter pumps petrol for his or her father’s car?” he asked.
Also, he said that cars are often obtained through hire purchase loans.
“So, is it the owner or the driver of the car that qualifies for subsidy?”
These complexities, he said, highlight the need for thorough planning and finding suitable solutions.
He said the information collected under the Central Database Hub system must ensure that this wealth of data is used effectively to
navigate the challenges presented by subsidy management.
Dr Wee said that the restructuring of subsidies should not only be aimed at increasing revenue but also to ease the people’s financial stress.
“I hope the government will find a proper system.
“It is essential to engage in collaborative brainstorming to avoid another round of price increases that would further burden the people,” he said.
Amid challenges like taxes, the economic downturn and a weak ringgit, Dr Wee emphasised the need for the government to enhance efforts in deepening economic development.
“Government projects should start rolling in high gear to stimulate the economy and encourage consumption, as this multiplier effect can drive overall domestic economic growth,” he said.
With a worrying domestic demand, particularly in the retail sector, he said Malaysia needs to attract more foreign investments and tourists, forge partnerships with countries and capitalise on
their potential.
Dr Wee suggested that Malaysia hold discussions with China, seeking permanent visa exemption between both nations.
Chinese nationals want to seek respite from the harsh winter or summer, he said, dispelling talk that they are eyeing Malaysian citizenship.
He said the Malaysia My Second Home programme should attract international residents, citing that the requirement for them to remain in the country for up to 90 days is a discouraging factor as the individual might have business to attend to back home.
The radio show, which was livestreamed on 988’s Facebook page, received feedback from listeners like Je Hao who commented that there was a “lack of careful planning” on the subsidies.
Chen Wen Qin cautioned that unclear execution of targeted fuel subsidy could lead to abuse.
As for Joan Low, she said the Malaysian economic situation is uncertain but acknowledged the government’s efforts in fighting corruption.