Thursday, November 08, 2007

Subsidies: RM35b or RM10b?

UMNO leaders typically attempts to talk a little more sense prior to an election, and this years' UMNO General Assembly, which is likely to be the last one prior to the next general election is no different.

UMNO Youth Deputy Chief, Khairy Jamaluddin, rightly criticised the current subsidy structure where the rich benefits more from the Government's subsidy scheme than the poor.

What was however interesting was when Khairy claimed that:
In all, the government had to foot RM35 billion, or 25 percent of government income, lamented Khairy during the debate on economy and education at the Umno assembly today.
Now, this RM35 billion figure is absolutely new to me. For the last I checked, specifically at the Goverment's 2007 and 2008 budget, the subsidy levels are no where near the purported figure given by the Member of Parliament and possible Minister in the making.

Based on the Budget figures provided by the prime minister's office, the subsidies allocated by the Government amounts to only RM12.2 billion and RM10.2 billion for 2007 and 2008 respectively, as shown in the table below.

Federal Government Operating Expenditure by Object 2006-2008

The question, I have then is, who is telling the truth? If the Government's budget is providing the accurate figure, then why is Khairy sensationalising the Government's budget by more than thrice the original amount? Was it to make it look like the Government's burden is higher than it actually is at "25% of total revenue", as opposed to only 7%? It is to illicit the rakyat's sympathy for the government which has wasted billions of the rakyat's tax payers monies in all manners possible?

Or on the other hand, more worryingly, did the Government published budget figure totally inaccurate and hides the fact that the Government (mis)allocates an incredible amount of funds to subsidise parties of unknown origins?

I've always had my suspicions and skepticisms over the manner by which the Government produces their budget numbers (e.g., the discrepancy of RM8 billion (!) expenditure between the Prime Minister's budget speech versus the published Economic Report), but if the above discrepancy is indeed "true", then it's absolutely shocking!


Anonymous said...

The answer can be found from the following simple calculation:

RM35b - RM10b = RM25b

It means PM's family and his UMNO cronies get this RM25b pocketed.

The shameful PM still has the face to praise that the ACA (absolutely corrupt agency) has done a good job in today's news. This is indeed a good (cover-up) job by the ACA!!!!

Anonymous said...

There are two kinds of Oxfoed graduates. One type talk sense with facts. The other just pass hot air through one one of the human anatomy

The Watchman said...

UMNO can start this subsidy mentality by removing the bumiputera discount from housing purchases and the overseas scholarships dished out to bumiputeras regardless of their parents' financial standing.

Jeffrey Chew said...

I am also an economist in a way and time and time again, Malaysians tend not to read in details. I am thankful that you are in the DAP. It's very clear that there are folks in the govt who assumes big numbers will never be questioned. I hope you will be voted in...

Anonymous said...

Sorry, off topic a bit...UKM and UM finally are out from Top 200!!!

See the link below:

I don't know whether to laugh or cry, but certainly it does not surprise me at all!

Now you can also use this an an issue in the coming GE to slap on the face of the sleepy PM.

WY said...

tony, are you going to be there at the 10th of Nov?

To be honest, as a Malaysian, i don't know whether numbers can be trusted. I would suggest that you get some of your staff to look at the inflation and GDP numbers too, which i suspected, are cooked or at least tempered with. I am not surprised if our public expenditure budgets include a $8mil KJ expenses account.

Do you need volunteers for your economics analysis team?

Unknown said...


One figure is for popular digest. If you add up all the duit kopi, you will get the other figure.

All i know is, at the 70's, a single story link house costed RM8 - 12 thousand + a general worker wage was around RM 3 - 4 hundred/month.

30 - 40 yrs down the road, the same property will cost around RM150 - 200 thousand. The same job will pay you RM1 - 1.5 thousand/month. That's just the house. Makan, transport + all other expenses naik with the same rate as your house.

All i know is the BN had milked us,short changed us + put us in a situation, where if you buy a house, a car (since the public transport is a joke) + makan + so on; we only work to pay till we go to our grave.

Anonymous said...

I have been wondering why those UMNO leaders love to talk nonsense. Seriously! He mentioned that English is taking away full understand of Maths and Science from the Malays. what does this mean?

Anonymous said...

The sleeping BN government still does not act resposively to the petrol crisis. The victim will definitely be the citizens again.

When is the 'efficient public transportation system' promised long long time ago to be ready for the general public to use? What has Mr.Chang Kong Choy aka the transport minister done to improve the transportation system? All what I can see is that he is busy everyday in opening ceremony or on medical leave in Australia.

Anonymous said...

And today The Star reports that Badawi says it is costing government RM 80bil a year. (

Which number is is the truth??

Anonymous said...

Tony, first may i know why you address KJ as a member of parliament. Is he?
Second, why are you assuming that he will be a future minister. Please be more confident of yourself. You are not in politics to be in opposition forever.
Third, with regard to the number on subsidy, i think you have to find out more first. The number quoted by you are direct subsdy, i.e. subsidies paid for by the government out of allocations. There are, however, other subsidies such as tax forgone, and subsidies borne by Petronas to the energy sector such as the IPPs, and the industrial sector. You need to check first before they label you ignorant.

Anonymous said...

The budget figures will also need to be compared with the Economic report before you can make a sensible assessment. Otherwise you will not just be labelled as ignorant but also a stupid oxford educated graduate

Golf Afflicted said...

Hey Anon 10.33,

Yup, I did check the Economic Report, yes, the fairly thick document. It says RM10.2 billion in there. Did you read the Report?

Note as per what someone noted here as well, Pak Lah now claims that the subsidies cost the Government RM80 billion. The figures are getting bigger. Unfortunately, no explanation on how these RM35 or RM80 billion are arrived.

Maybe you should ask Pak Lah to check the Economic Report, no? ;-)


NEO said...

Hi Tony,

The answer is simple its rounding up differences but under the leadership of Pak Lah, the mininum unit of measurement is in 10 billions