
Wong Choon Mei, Malaysia Chronicle
As Opposition Leader Anwar Ibrahim has warned, the Umno cronies and wolves have begun baying for the RM750 million being wrenched from Malaysian consumers, following a decision by Prime Minister Najib Razak to cut subsidies and raise prices of sugar, cooking gas, petrol, diesel and LPG.
Anwar has suggested the money is channeled back to the citizenry through educational projects and direct aid to low-income groups. "My advice is the money be used to increase funding for tertiary education institutions, new investments in education and direct welfare aid to low-income groups," he said.
Meanwhile, others have suggested lowering personal income, tax rebates for targeted groups, and even new development projects to pump prime the economy. However, in the scheme of things, RM750 million is not a large sum and cannot do much.
High risk of the low-income sliding back into poverty
So perhaps, the Opposition Leader's suggestion might be the most practical and the safest for the citizenry. In particular, some form of direct aid must be extended to the low-income groups because a lot more subsidy cuts are on the way and that is for sure. Toll rates for the highways will be increased, electricity tariffs will be raised. Food and transport will go up. Even water prices may not be safe.
Without commensurate rises in wages, low-income Malaysians who are already struggling to survive may not survive the next round of hikes. It may knock them back into poverty and further social degradation.
Tax cuts and rebates while worthy of further thought should not be considered at this point because most of the lower-income groups do not pay tax in any case. So this wont benefit them, but only the layers above them. But it won't be long before the middle income feel the full-blown pinch and this is when ideas fo! r tax cu ts targeting individuals may come in handy.
Nevertheless, for this round, it is the bottom rung that will feel most of the hit because of the sharp price rises in sugar and cooking gas. Not only directly, but also indirectly, especially when the increases work their way into prices of cooked food and public transportation.
Why isn't there a coordinated and structured plan
According to HwangDBS Vickers Research analyst Chong Tjen-San, there are 19 highways scheduled for toll rate increases over the next 4 years. If the government were to maintain toll rates at current levels, it would have to fork out RM3.19bil in subsidies over the next 4 years, he said.
So more increases on the way. Thats fine in the sense that it is logical for the federal government to want to reduce subsidies and cut the national debt. But why at such abrupt and sharp expense to the citizenry, who will have to pay for whatever the government saves.
Why also were alternative solutions proposed by various experts, including opposition politicians, not allowed to be publicly debated? For example, why are the toll operators left unscathed? Can the federal government not re-negotiate the concessions granted and why were the contracts so one-sided in the first place?
Indeed, the public feedback that Idris Jala - the minister tasked to steer the subsidy cuts - has said he would seek seems to have been publicized only to himself and his bosses, but not the rest of the country.
Cronies again? Another research house OSK reckons that Tenaga Nasional, MMC and Gamuda may be the three most likely candidates to gain from this round of government savings. Or more more accurately, from the citizenrys hard-earned money because the RM750 million really comes from their pockets as they now have to pay more for their sugar, cooking gas, petrol, diesel and LPG.
Currently, national oil firm Petronas subsidizes the price of natural gas supplied to Independent Power Producers - to th! e tune o f RM13.8 billion according to OSK. If Petronas stopped, the IPPs can retaliate by halting operations and removing 4,105 MW worth of electricity from the system and dropping reserve margins to as low as 13 per cent (considered a low level versus the more normal 20 to 30 percent buffer).
If this happened, Tenaga would have to raise electricity tariffs unless it expanded capacity. There is now speculation that the RM750 million could be used to boost the power plants of TNB and MMC at Janamanjung and Tanjung Bin. MMC is linked to tycoon Syed Mokhtar al-Bukhary, who himself has links to the Umno elite.
But what can RM750 million do it is only enough to give Najib the opportunity to approve and kick-start the projects. After that, what? Will Malaysians be left in the lurch and stuck in yet another long drawn-out and disadvantageous agreement - just like the toll road concessions?
Same goes for Gamuda (yes, the home-grown construction giant linked to the Perak royal family). Again, the research firms are betting that Najib will most likely channel the RM750 million into the new RM43 billion KL MRT project proposed by Gamuda and MMC. With just RM750 million, and already the Najib administration is sounding out a RM43 billion project!
Waking up too late
Sadly, all trails lead to corruption past and present. Malaysians have now got to face the fact they have been wearing rose-tinted glasses for the past five decades, especially during Mahathir era, when blinded by large-scale development, they did not question him or allowed him to be questioned.
But basically, whatever corrupt money was reaped by the past governments has left the country long ago. Those stuck with the baby are the Malaysian citizenry, the current administration and the companies that signed those contracts such as the toll road firms.
The Najib administration can re-negotiate with these toll road operators, but why would they wish to give up their profits without a fight? As they may have en! ticed of ficials in the Mahathir administration into one-sided contracts, perhaps they may now be enticing officials in Najib administration to not rock the boat. Why change when change is not to their advantage?
So left in the lurch is really the Malaysian people, who have to travel these roads whether in their own vehicles or in public transport each day, who have to buy those Proton cars even if the doors can't open smoothly after just a week of getting them, who have to put up with expensive petrol when their own country is still an oil producer. The list just goes on.
It is not a new story but so shocking and sad is the plight of the average Malaysian, most of them still cant quite believe the mess their country is in. But no need for any wake up calls anymore. It is too late. The only medicine for the economy is political - drastic political change and reform.
Also read:
- A Pictorial Guide to Najibnomics: Subsidy Cuts and Price Hikes ...
- Price hikes:Najib unfazed by public anger, selects Merdeka attire...
- Najibnomics: Price adjustments not hikes, rationalization not cuts...
- Spell out how savings from subsidy cuts will be spent : Anwar ...
- Cut in sugar subsidies not even enough to pay APCO : Anwar...
Letter & Opinion From Joe Public