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Saturday, October 4, 2014

Kicking our subsidy addiction vital for sustainable growth

Mercedes Benz drivers have more to gain from petrol subsidies than Perodua drivers
fuelKUALA LUMPUR: The misguided belief that fuel subsidies should continue forever is just hurting us in more ways than one. For one thing, it is enjoyed by large corporations and the top 20 per cent of the population, who don’t need it.
Mercedes Benz drivers have more to gain from petrol subsidies than Perodua drivers – their vehicles consume more fuel, due to larger engine capacities and therefore they get more savings.
It also means most of us don’t think twice about driving absolutely anywhere and everywhere – even to places we could easily walk to.
There are people who refuse to consider using public transport to work, simply because we can afford our own cars thanks largely to the fuel subsidy.
Thus, our consumer behaviour is not dictated by market forces, but by artificially low prices due to long-standing subsidies.
There are a growing number of Malaysians who talk about migrating abroad to developed countries like the United States, Australia and the United Kingdom. Well, if they were to move there, there would be no subsidies for them to enjoy.
Developed countries simply do not have subsidies like we do, instead they have targeted subsidies which assist the bottom 40 per cent of their population in terms of income.
As we head closer towards developed nation status, our attitudes must also change and we cannot continue to have the developing nation mentality. We quite simply have to cut our addiction to subsidies.
Despite the latest fuel subsidy rationalisation which came into effect on October 2, the government would still need to fork out more than RM21 billion on RON95, diesel and liquefied petroleum gas subsidies this year.
It is abundantly clear that the huge subsidies are messing with our national budget. The resources spent on subsidies could be put to more productive use as well as for other safety nets for the public at large, and for the bottom 40 per cent of the population in particular. – BERNAMA

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