Saturday, May 29, 2010

Cut Subsidies to Crony Companies for More Impact

Cutback on IPP and SYABAS subisidies, not agri products
By Ken Vin Lek

KUALA LUMPUR: Cutting mounting national debt and how the Performance Management & Delivery Unit (PEMANDU) is planning to do this a key concern of PJ Utara MP, Tony Pua.

Speaking to FMT Pua said while PEMANDU, a government arm, had done decent job on presenting ways to cut subsidies, the authorities had however not drawn attention to the other subsidies allocated to the private sector.

“Subsidies being given to Independent Power Producers (IPP) are worth RM13 billion a year, there is a 20 year interest free loan of RM 320 million given to SYABAS (which is also a privatized company), sports betting concessions being allotted to monopolies without open tender,” he said after attending the Subsidy Rationalisation Lab Open day yesterday.

Expressing his dismay at recent announcements that the government was thinking of cutting subsidies on agriculture products worth RM3.4 billion a year, he said the move would have a heavy impact on the low and middle income society.

He added that the government has a mounting debt problem and should instead focus on cutting wastage of money in procurement, privatization projects and corruption.

“If you try to solve the subsidy issue without resolving other major problems, you are not going to solve our mounting debt in the long run,” he said alluding to the commonly known wastage of money in procurement, privatization and corruption.

He adds: “A very good example is the RM8 billion spent on purchasing armoured vehicles. It simply makes no sense to spend that kind of money and cut subsidies as planned.”

Touching on Pemandu chairman Idris Jala’s statement that Malaysians are overusing petroleum, Pua concurred.

While admitting that the nation indeed ‘over-consumed’, he blamed the attitude on the policies implemented by our government over the past 20 years.

“Firstly, we have not been upgrading our public transport system. How do you expect people to travel around without an efficient and wide covering public transport.”

“Secondly, our government chose to spend money supporting our national automotive carmakers and as a result, we have the highest car ownership ratio in the entire region” he said.

When asked whether it is wrong for people to expect subsidies, Pua said ‘no.’

He said subsidies were set based on the affordability of products to the rakyat.

On the issue of our nations woeful current debt standing at 54% of our GDP or RM362 billion, Pua replied “It is definitely at a precarious level, but we are fast approaching the danger zone.

“The problem however is that debt can accelerate very fast because of interest and this will severely affect our ability to repay this loan.”

“From what I know, a large proportion of such loans are maturing over the next few years and the government might have a problem refinancing them” he added.

Pua’s pitch and view on the matter was simple.

“We need to review subsidies being given to privatised company. We should look at the matter of debt holistically and not just on subsidies, bearing in mind that wages have been stagnant for for over 10 years and cutting subsidies would hugely affect the rakyat.”
Post a Comment