Wednesday, May 18, 2011

Whose "opium" to cut?

Pakatan faults BN for subsidy ‘opium’ addiction
By Clara Chooi May 18, 2011

KUALA LUMPUR, May 18 — Pakatan Rakyat (PR) lawmakers have blamed Barisan Nasional (BN) for failing to address the country’s addiction to subsidies with alternatives, rebuking Datuk Seri Najib Razak for transferring the “opium’ to cronies.

They said escalating cost of living and stagnant wages have made Malaysians dependent on subsidies, warning that any sudden removal would bankrupt people instead of encouraging competition and wiping out market distortions.

The PR lawmakers suggested the Najib administration take a more holistic approach to cut its burgeoning subsidy bill through a total restructuring of the system by reducing subsidies to corporate giants instead of to the poor, implementing a minimum wage council to boost salaries, and providing better public transportation system to reduce dependency on vehicle ownership and fuel consumption.

“What they are essentially doing shows that they are not serious in their intent to restructure subsidies in the country,” said DAP publicity chief Tony Pua who agreed with Najib subsidies were like “opium” to the Malaysian economy but he blamed the government for failing to provide a proper alternative to consumers before reducing their access to the subsidy “opium”.

He also complained that the administration was going about its subsidy removal plan in the wrong way by cutting from the “poor man on the street” and yet at the same time, still providing massive subsidies to big corporate giants.

“What Najib is doing instead is making this opium exclusive to Barisan Nasional (BN) cronies,” the Petaling Jaya Utara MP told The Malaysian Insider.

He said in order to ease the people’s addiction to the subsidy “opium”, better alternatives should be made available like a good public transportation system.

“At this point in time, Malaysians consume a large amount of fuel, not just because we pay lower-than-market rates but because we have no other alternative but to own cars due to the lack of transportation infrastructure,” Pua added.

He also suggested the government consider cutting back on its subsidies to corporate giants like the independent power producers (IPPs) and toll concessionaires instead of depriving the poor of financial aid.

For the full article, click here.


Matthew said...

Agree. Subsidies are harmful and are the true distortion to the economy's mechanism. Imposing a minimum wage would be a good idea, but bare in mind that it would cause an increase in the already high current inflation rate, especially food basket. We would need a more subtle policy or rather, an adequate model than just increasing multitude's nominal income. Sad to say, I have yet able to see any model or solution capable to withhold the Subsidies-Alleviation's aftermath.

Matthew said...

on the side note. I agree to Najib's Opium analogy (Although why did he particularly picked Opium out of so many harmful drugs is still a mystery)... but I disagree how he is proposing to throw the economy into Drug Rehabilitation Center and have it wash with cold waters. I don't think it's very healthy for the foreign investments' prospect as well as domestic well being.

Anonymous said...

I think someone should explain that inflation is basically a tax on the poor because the poor gets affected by inflation disporportionate as a percentage of income.

Removal of direct subsidy is basically a removal of direct tax break for the poor. Conversely a removal of subsidy to corporate is a removal of tax break to the corporation. It may increase prices ultimately but it should have a less impact given the corporates are taxed first.

najib manaukau said...

The opium Najib is referring to ,is the opium the poor people is taking and not the opium the big boys at the corporate level. And who are these big boys ? Need I say anymore.