In the United States and Europe, the price of fuel for cars changes almost every day as it is not subsidised. This is something most Malaysians are unfamiliar with as we are, and have been, living on subsidies for almost every essential item, even sugar which is unheard of elsewhere.
The government’s bill for subsidising petrol, diesel and gas has risen from RM8bil to RM18bil a year. Yes, it’s a staggering figure and certainly we can expect the numbers to keep increasing unless there is a drop in crude oil prices.
The government can take the easy way out by keeping the prices of petrol down to remain popular, especially with a general election looming. But that would be bad governance.
If Datuk Seri Anwar Ibrahim can reduce the price of petrol as he claims, I am sure Obama would be quite keen to hear from him. The Opposition Leader must have a magic wand. He may be able to do it but the long-term effects would be disastrous and could well bleed the nation. To put it bluntly, it could bankrupt Malaysia.
There is a cost to the subsidy – the government should be channelling the subsidy to the health, education and housing sectors. There are also many infrastructure projects that have already been announced and we wonder how many of these would be affected, even put on hold, if the subsidy bill continues to spiral upwards.
The government could save at least RM103bil over the next five years if it were to slash its subsidy bill now. This, however, can only be done gradually with enough notice served on Malaysians to explain that the government just cannot continue to bear this burden.
The government has little choice but to explain to the people the rationale behind the subsidy cuts. It’s not an easy task as ordinary Malaysians have bills to pay. And against the backdrop of increasing costs of production, most employers would be hard-pressed to increase the salaries of their workers.
At the same time, we can expect industries to pass their cost to consumers even though the increase in electricity rates is only an average of 7.12%.
The Opposition has been playing the populist card, blaming the government for every price hike and promising to reduce the price of oil, which any rational person would know is not achievable. Surely, every serving government would want to keep prices down to get itself re-elected.
Economists want the government to take a more daring approach to push ahead the subsidy rationalisation exercise. But they are obviously not counting the political costs if this is not done gradually.
Their fear is that if Malaysia continues to bear the high subsidy bill, it would impact on the country’s sovereign ratings as the budget deficit would stand to widen.
In simple language, the country’s debt cannot be allowed to increase if its credit status is to be respected. The bottom line is: provision of subsidies is not a sustainable practice. It has to be removed eventually but at the same time, the government is well aware that any decision should not affect the consumers’ standard of living. Even some government MPs have been cautious about any increase in petrol or food items.
But take the sugar subsidy as an example. When the prices of coarse and fine sugar increased by 20 sen to RM2.30 per kilo, it reduced government subsidy by RM116.6mil from RM400mil per year. The latest increase is the first this year, after last year’s hikes of 20 sen in January, 25 sen in July and 20 sen in December.
It is incredulous that we would fork out so much for sugar while we ask for less of it with our teh tarik. Yet some of us will get bitter when there is a cut in subsidy for sugar.
Look at the statistics: there are 1.4 million adults suffering from diabetes as at 2006, according to a national health and morbidity survey. We can assume that the number has gone up since then, at the rate we consume sugar-laden soft drinks.
Now, according to estimates by the Health Ministry’s disease control division, health promotion, management and treatment of diabetic patients take up about 15% to 17% of the ministry’s total budget of RM13.7bil in 2009. That can’t be sweet news to Malaysians, especially taxpayers. Moreover, that figure does not include diabetics who seek treatment in private hospitals.
But at the same time, we, too, want the government to cut down on excessiveness and wastage and review existing projects that are perceived to bring little economic returns.
We can save but the government must also play its part. It’s a shared responsibility.
Malaysians, like everyone else on this planet, cannot live like they used to.
The days of cheap food will be a thing of the past. We cannot depend on fossil fuel forever. We cannot leave the fan, air-conditioner, lights and television on for no reason and, certainly, our children will pay a heavy price if we waste water as we are doing now.
This seems to be the only immediate answer if we want to sustain the planet.