Mixed Reactions Over Plan To Cut Subsidies

May 28, 2010 14:17 PM

KUALA LUMPUR, May 28 (Bernama) -- The Transport Workers Union (TWU) has welcomed the government's openness in its subsidy rationalisation plan but said that subsidies on essential items should be retained.

Its secretary-general Datuk Zainal Rampak said doing away with subsidies on items such as flour and cooking oil would affect the low-income group.

"I don't quite agree if the government abolish the subsidies on these items because it will increase the price and burden those in the low-income group," he told Bernama.

He also called for a better deployment of subsidies for certain items and not abolishing them altogether.

For instance, he said, the government could deploy a better mechanism to implement subsidies on school textbooks because at the moment, even those from the affluent families benefited from the scheme.

"This constitutes a loss to the government," he said.

He was commenting on the proposal to reduce subsidies in stages as spelled out in the government's five-year subsidy rationalisation roadmap unveiled yesterday by Minister in the Prime Minister's Department Datuk Seri Idris Jala.

Idris said the move would save the government some RM103 billion during the period.

The Federation of Malaysian Consumer Associations (Fomca) advisor, Prof Hamdan Adnan, said the government should put in place a strong justification before cutting the subsidies so as not to burden the low-income group.

"The government should not hastily implement subsidy reduction," he said, adding that the government should also monitor any increase in prices arising from the move.

The Malaysian Muslim Consumers Association supported the subsidy reduction, with executive secretary Datuk Paduka Nadzim Johan saying it could spur productivity and overcome reliance on subsidies.

-- BERNAMA

Subsidy Cuts A Must To Save RM103 Billion In 5 Years To Reduce Deficit And Debt

May 27, 2010 20:46 PM

KUALA LUMPUR, May 27 (Bernama) -- Malaysians must bite the bullet and wean off subisidies to save the government RM103 billion in five years to reduce the nation's deficit and debt, said Datuk Seri Idris Jala, Minister in the Prime Minister's Department.

He said the government would focus on big ticket items such as fuel, electricity and toll to achieve the savings but it would continue to subsidise the poor and disadvantaged.

"The time for subsidy rationalisation is now. Otherwise, we have a time bomb on our hands," Idris said on the open day on the subsidy rationalisation plan proposed by the Performance Management and Delivery Unit (Pemandu) of the PM's Department.

Idris, who is Pemandu CEO, told a packed hall at the Kuala Lumpur Convention Centre, that Malaysia was one of the highest subsidised nations in the world and the subsidies must be phased out gradually.

"We do not want to end up like Greece. Our deficit rose to a record high of RM74 billion last year," he said, adding that at the rate, the nation could go bankrupt by 2019 with debts totalling RM1.158 trillion.

Meanwhile, the proposed subsidy cuts received mixed reaction from members of the public who attended the Subsidy Rationalisation Lab Open Day here.

"Subsidy is a financial aid given by the government to help the people reduce their cost of living, but it also has a negative impact on the country's economy," said Mardiah Madun.

Hence, the 26-year-old clerk said it was vital for the people to be educated on the negative repercussions awaiting the country if the subsidies were not cut.

Nirfadilah Azit, 32, on the other hand, said that despite being an acceptable proposal, the implementation of the move should be done in stages so that the people wouldn't be too shocked with drastic changes.

"If it is implemented simultaneously, I'm afraid the people will not be able to accept it and thus, blame the government," she said.

Meanwhile, a mechanic, Halim Salim, 36, described the proposal as a way to inculcate the spirit of being independent among the people.

"With the subsidy, the people have become too dependent on the government. Now that the government wants to cut the subsidies, maybe we all can learn to be more independent," he said.

For a civil servant who wanted to be known only as Mimi, 46, the subsidy cuts would give a major impact especially to the middle-income group.

"I think it should be further reviewed," she said.

-- BERNAMA

Malaysia Likely To Be Net Oil Importer By 2011

May 27, 2010 15:33 PM

KUALA LUMPUR, May 27 (Bernama) -- Malaysia is likely to become an oil importer as early as next year at the current rate it is consuming petroleum, Minister in the Prime Minister's Department, Datuk Seri Idris Jala on Thursday.

Malaysians continue to be among the highest fuel consumers per capita in the world fuel consumption habits pattern which generally has remained relatively unchanged despite increased oil prices in 2008.

He also said that approximately 70 per cent of the government's liquid petroleum gas (LPG) subsidy goes to commercial concerns and not the intended households.

About 30 per cent of the cooking oil subsidy is also abused, he said.

He said the government is proposing to phase out the petrol subsidy gradually in line with its move to strategically position Malaysia's economy on a stronger footing to realise the aspirations of Vision 2020, which is to achieve a developed, high-income nation status.

"Subsidies are an inaccurate representation of trade," Idris said when officiating the Subsidy Lab Open Day here to receive feedback from the public on subsidies.

"In addition, they pose a fiscal burden that emerging economies such as Malaysia should move away from. As such, we desperately need an exit strategy for subsidies, as they are unsustainable," he said.

"In order to save the country, we need to increase our GDP, Malaysians need to be aware we are giving the highest subsidies -- 4.6 per cent of GDP even higher than Indonesia (2.7 per cent) & Philippines (0.2 per cent)," said Idris, who is also the Chief Executive Officer of the Performance Management and Delivery Unit (PEMANDU).

Malaysia is one of the most subsidised nations in the world. Its total subsidy of RM74 billion in 2009 is equivalent to RM12,900 per household.

This covers the areas of Social (RM42.8 billion), Fuel (RM23.5 billion), Infrastructure (RM4.6 billion) and Food amounting to RM3.1 billion.

"All savings to reduce these savings are intended to reduce our deficit and debt of 103 billion in five years," he said.

Meanwhile, studies by Bank Negara have shown that inflation will rise to four per cent (2011-2012) and three per cent post 2013.

Subsidies only result in market distortion and they drain the government of much needed funds that could be better used for more strategic and pressing development projects for the rakyat, Idris said.

"The time for subsidy rationalisation is now," he said.

"We are reviewing the possibility of introducing a floating price mechanism, mitigation measures and assistance needed to put in place."

"We do not want to end up like Greece with a total debt of EUR300 billion. Our deficit rose to record high of RM47 billion last year."

"If the government continues at the rate of 12 per cent per annum, Malaysia could go bankrupt in 2019 with total debts amounting to RM1,158 billion," he cautioned.

-- BERNAMA

Government May Fork Out RM200 Billion In Petrol Subsidies If Price Not Increased

May 27, 2010 16:22 PM

KUALA LUMPUR, May 27 (Bernama) -- The government may fork out a staggering RM200 billion to subsidise petrol and diesel prices in the next 20 years unless fuel prices are raised, Minister in the Prime Minister's Department, Datuk Seri Idris Jala said on Thursday.

Fuel subsidies represent 5.0 to 44 per cent of Malaysia's fiscal deficit (and) "it is a huge burden for the country," he said when opening the Subsidy Lab Open Day here to receive feedback from the public on subsidies.

With Malaysia consuming more fuel compared with other countries in the region, he said "Malaysians need to be aware that we are one of the highest subsidised nations."

The difference between the pump price and actual market is subsdised, he said in his remarks to members of the public at the lab.

The lab comes under PEMANDU, the Performance Management and Delivery Unit of which Idris is the chief executive officer.

He said that crude oil price, currently hovering at US$71.51 per barrel, is expected to continue to increase to US$75.37 this year.

Idris said that the fuel subsidy should be reviewed because it mainly benefits the middle and high income groups.

"There are a lots of leakages. Malaysia will be a net importer of petroleum products by 2011 (and) the subsidy bill will increase to about RM200 billion in next 20 years," he said.

Idris said that the subsidy rationalisation lab studying the impact of subsidies on the economy has recommended that petrol price (RON 95) be raised by 15 sen from RM1.80 per litre to RM1.95 per litre between June and December this year.

The subsidy for RON 95 is currently at 44 sen per litre.

As for diesel sold at RM1.70 now, he said it should be increased by 10 sen.

The subsidy for diesel now amounts to 40 sen.

As for Liquefied Petroleum Gas (LPG), which was priced at RM24.50, it should be raised to RM27.

Idris said that petrol price should be increased 10 sen per litre gradually every six months and a 20 per cent incease in LPG price every year.

He said there should be a gradual reduction in subsidies so as not to burden the people.

The time is right to raise petrol prices as world crude oil price is relatively low at around US$71.65 per barrel, he added.

-- BERNAMA

Proposed Subsidy Rationalisation By Pemandu

May 27, 2010 21:00 PM

KUALA LUMPUR, May 27 (Bernama) -- Highlights of subsidy rationalisation proposal, mitigation measures and savings unveiled by Minister in the Prime Minister's Department Datuk Seri Idris Jala Thursday:

2009 SUBSIDY

*Total RM74 billion or RM12,900 per household

*Breakdown: Social RM42.8 billion, fuel RM23.5 billion, infrastructure RM4.8 billion, food (RM3.4 billion);

FUEL

*Petrol price will be gradually increased by 15 sen/litre, diesel price by 10 sen/litre, LPG by 10 per cent per litre by the middle of the year. Thereafter 10 sen per litre every 6 months and 20 per cent for LPG every year;

*Cash rebates of RM54 per person per motorbike (less than 250cc) and RM126 per person per car (less than 1,000 cc) totalling RM526 million;

*Government savings: RM44.9 billion over 5 years;

GAS

*Gas price (power) to increase by RM4.65/MMBTU

*Gas price (non power) to increase by RM2.52/MMBTU

*Electricity tariff by RM0.024/kWh;

Thereafter, gas price (power and non-power) to increase RM3/MMBTU and electricity tariff by RM0.016/kWh every six months;

*New electricity tariff will not impact 56 percent of consumers

*Government savings: RM35.9 billion over 5 years;

TOLL RATES

*Increase as per concession agreement applicable only for toll highways which have alternative routes;

*20 per cent discount for toll users upon next reload, applicable for more than 80 transactions per month; to cost government RM60 million;

*Government savings: RM3.7 billion over 5 years;

FOOD

*Sugar price to be increased 20 sen/kg every six months until 2012

*Flour price to be increased 20 sen/kg in 2010 and 25 sen/kg in 2011

*Cooking oil to be increased 15 per cent per kg in 2010 and 15 per cent per kg in 2011 and thereafter, 5 per cent per kg every year until January 2014;

*Cash rebate of RM20 to Mykad/MyKid card holders through post-offices in first year, to cost government RM560 million;

*In second year, discount through MyKasih Card for incomes below certain threshold) and use designated shops such as SaveMore, petrol stations at high poverty, to cost government RM200 milion per year;

*Government savings: RM8.5 billion over 5 years.

REDUCE WASTAGES & EFFICIENCIES

*Agriculture: usage of targeted fertilisers.

*Education: remove subsidies for foreign students and re-target subsidies for poor families.

*Fisheries: increase diesel price, increase incentives for fish caught from 10 sen to 50 sen/kg, maintain RM200 monthly allowance.

*Health: increase outpatient fees from RM1 to RM3, full subsidy for poor to continue;

*Wastages and efficiencies to be reduced by RM16.3 billion over 5 years;

TOTAL SAVINGS

*RM103 billion over five years;

*RM2.976 billion (2010), RM14.118 billion (2011); RM21.104 billion (2012);

*RM29.51 billion (2013), RM35.542 billion (2014).

POLL

*191 Malaysians polled via SMS, forms and online.

*61 per cent support subsidy rationalisation.

*66 per cent want subsidies reduced in 3-5 yrs.

-- BERNAMA

Rationalising Subsidies For Real Growth

May 27, 2010 12:15 PM

KUALA LUMPUR, May 27 (Bernama) -- Malaysia needs to rationalise its subsidy issue to move forward economically, Minister in the Prime Minister's Department Datuk Seri Idris Jala said Thursday.

Idris, who is also the Chief Executive Officer of the Performance Management and Delivery Unit (PEMANDU), said in addition to encouraging greater conservation and less consumption, Malaysia also needs to keep abreast of the global trend of less subsidies.

"Imagine, even Somalians are paying much more for petrol than Malaysians," he said at the Subsidy Lab Opening Day at the Kuala Lumpur Convention Centre (KLCC) here.

The lab, open from 9am to 2pm today, is being held to get suggestions and feedback from the public on the government's plan to reduce subsidy.

Idris said according to statistics from the Organisation for Economic Cooperation and Development (OECD), Malaysia's subsidy expenditure as a percentage of nominal gross domestic product (GDP) between 2006 and 2009, was at a staggering 11 per cent.

This, he added, was almost three times more than non-OECD countries like the Philippines and 55 times more than a OECD country like Switzerland.

"Our subsidy bill is not sustainable, especially in light of the rising budget deficit and government debt (as a percentage of gross domestic product). It is higher than Indonesia at 28 per cent and getting closer to the Philippines at 62 per cent," he highlighted.

According to Idris, a subsidy culture has negative consequences, staing that subsidies often go to wrong beneficiaries and are subject to leakages and abuses while promoting market distortions as well as encouraging over-consumption that results in over-production.

He said approximately, 97 per cent of Malaysia subsidies are dispensed on a "blanket" basis.

"It is given to everyone regardless of income level, for example, subsidised primary, secondary and tertiary education, medical services, petrol, sugar and cooking, as well as welfare aid and sustenance allowance," he explained.

The government, in its subsidy rationalisation framework will among others, focus on big ticket items to achieve bigger savings as for fuel, gas and toll while continuing to subsidise education, as it is a human capital investment.

Efforts will also be made to reduce wastage and abuse.

-- BERNAMA

Malaysia aiming for LTE auction in 2011

Malaysia aiming for LTE auction in 2011
Nicole McCormick April 26, 2010
telecomasia.net

The Malaysian government aims to auction three spectrum blocks at 2.6Ghz for LTE next year.

Toh Swee Hoe, senior director research and planning at the Malaysian Communications and Multimedia Commission (MCMC), told telecomasia.net it expects to sell two 70MHz blocks at 2.6GHz and one 50MHz block.

“There will be a public consultation later this year with industry on the marketing plan for the 2.6GHz,” Toh said.

But with only three proposed LTE licenses, one of Malaysia’s four cellcos – Maxis, Celcom, Digi and U Mobile – will miss out on the valuable broadband spectrum.

All four operators are offering HSPA services today. The natural technology progression will thus be LTE in a few years’ time.

In the meantime, the MCMC is conducting closed consultations with all four operators about refarming 2G spectrum at 850MHz, 900MHz and 1800MHz for 3G.

“Bids for the new tenure will limited to only [existing] 2G-3G operators,” said Toh on the refarming exercise.

The battleground for telcos in Malaysia is in the broadband space as operators strive to achieve the government’s goal of 50% household broadband penetration by year-end.

At the end of 2009, the penetration rate was 38.6%.

“We should achieve the 50% target,” said Toh.

He said the goal was dependent on 1 million netbooks with broadband subscription being distributed by end 2010.

If that happens, this “should bring our penetration to over 3 million households,” thus the 50% target will be reached, said Toh.

Source: http://www.telecomasia.net/content/malaysia-aiming-lte-auction-2011