Irrational way to inform public on subsidy cuts

NOBODY should be surprised that the disclosure on Monday of some details of the new fuel subsidy scheme was greeted with a barrage of questions driven mostly by concern and scepticism.

Movements in the prices of petrol, diesel and liquefied petroleum gas affect everybody, from the poorest among the men in the street to the largest of the multinational corporations. The same goes with the regulation of the purchase and consumption of these fuels; unwieldy and complicated rules can disrupt our lives.

Clearly, the programme to restructure Malaysia’s subsidies is a delicate yet pressing matter.

Most of us are familiar with the arguments for urgent action. For example, in 1994, the Government allocated RM588mil for subsidies. This year, the corresponding figure is RM40.5bil, which stretches the country’s fiscal position to an uncomfortable extent.

The subsidy rationalisation programme has already kicked off, with a focus on those truly in need, and on addressing leakages and smuggling.

The main challenge though is to develop a better mechanism for delivering the petroleum subsidy, which covers RON95 petrol, diesel and cooking gas.

As Prime Minister Datuk Seri Najib Tun Razak pointed out in his Budget 2015 speech on Oct 10, the rakyat is more aware of the subsidy rationalisation efforts and is therefore more prepared for the impact.

Still, the inevitable fuel price hikes will not be painless for many of us. This is why it is important to manage the subsidy revamp with care and transparency.

On Monday, Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah told reporters that the Government was studying a fuel subsidy mechanism that would be based on the income of vehicle owners.

The Star Says.

Read more @ http://www.thestar.com.my/Opinion/Columnists/The-Star-Says/Profile/Articles/2014/10/29/Irrational-way-to-inform-public-on-subsidy-cuts/

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