MEASURED MOVES BY GOVERNMENT
Political observers have suggested the government has wanted to tread carefully when it came to implementing the subsidy cuts as it could hurt in terms of support from the public.
Former United Malays National Organisation (UMNO) information chief Shahril Hamdan said that Mr Anwar’s cautious address sounded like a budget speech.
“I am not sure if there was anything really new besides some details about targeted subsidies,” he said, speaking on an episode of his Keluar Sekejap podcast on Wednesday (May 22).
His co-host, former minister of health Khairy Jamaluddin said that Mr Anwar had tried to build a narrative that the restructuring of the subsidies system would be happening soon.
“It was to soften the ground and to get the people prepared that this was going to happen,” he said, adding that it was a fair address.
However, Mr Anwar did not disclose when the diesel subsidy rationalisation would be implemented but said that to avoid a dramatic increase in the price of goods and services, the government would provide diesel subsidies to businesses that utilise select commercial diesel vehicles.
This includes 10 types of public transport vehicles and 23 types of goods transport vehicles under the Subsidised Diesel Control System, including buses and taxis.
Mr Anwar also said that eligible individual owners of diesel vehicles would be supported with cash handouts.
He also claimed that the unity government’s move to introduce the targeting of diesel subsidies is a “brave” one, and certain quarters would question it.
Currently, diesel is sold at a price of RM2.15 per litre. RON 95 petrol, one of the most popular petrol types in Malaysia, meanwhile is sold for RM2.05 per liter.
Fuel prices in Malaysia are among the lowest in the world.
Anwar also said that blanket subsidies in Malaysia needed to stop, saying that they were among the highest globally.
“What for? Blanket subsidies are more beneficial to the ultra-rich because their consumption or spending on goods and services is greater. 3.5 million foreigners also benefit from … subsidies,” he had said in the same speech.
Mr Anwar said that the savings from giving blanket subsidies would then be channeled to those who really needed the assistance.
In the past, blanket subsidies have been given for electricity use, cooking oil and rice among other things.
However, recently the government has been making an effort to cut down on subsidies, with the country ending subsidies and price controls for chicken and for those who use more than 600kWh of electricity, since last year.
In his address, Mr Anwar also touched on corruption and the poor fiscal state of the country, with a need to increase tax revenue alongside rationalising subsidies.
Mr Anwar said that government debt totalled RM1.2 trillion or 64.3 per cent of the gross domestic product and if other liabilities were included, it totalled RM1.5 trillion or more than 80 per cent of the GDP.
“This … debt is a waste of the people’s money because a lot of it is used to pay interest. This year, every one ringgit we collect in tax, 16 cents is used to pay interest: we haven’t even spoken about the principal,” he said during his May 22 address.
Opposition leader Hamzah Zainudin claimed that Anwar’s address had caused unease among the people as the fuel subsidies cuts would cause spikes across the entire economic chain at a time when people were burdened with the high cost of living.
He said that the elephant in the room was when the fuel subsidy rationalisation would come into effect and what was the government’s mechanism to channel aid to people.
“The people want to know when fuel prices will go up? How can they apply for aid? This was not spelt out. Even after months, the government is implementing the principle of announcing first and thinking later,” he said in a statement on May 22.
The start date hinges on what functions are in place to ensure a smooth implementation, say analysts.
Domestic Trade and Cost of Living Minister Datuk Armizan Mohd Ali said on May 23 that discussions were ongoing on how the diesel plan would be implemented, specifically on how aid could be distributed to target groups.
“As long as the Cabinet is not pleased with the mechanism, especially how target groups will receive the aid, we will not set a date. Once the government finalises this aspect, an announcement will be made on the start date,” he was quoted as saying by The Star.
