Dismantle Fuel Subsidy System, Says Economic Professor
Posted by anakbuah at Thursday, June 19, 2008
KUALA LUMPUR, May 26 - The subsidy system, especially for fuel, should be dismantled as Malaysia is capable of absorbing the consequences, according to a professor at the London School of Economics and Political Science (LSE).
"It could well be tolerated by reducing it by 20 percent or if not higher in very short term or in six months," said Prof Danny Quah at a public lecture on "The Rise and Fall of Subsidies" organised by the LSE Alumni Society of Malaysia here Monday.
The government has allocated about RM56 billion for fuel subsidy alone, "making it the bulk of a huge looming deficit for the country," said Quah, who is also head of the Department of Economics at the LSE.
"The system could stand that (dismantling the subsidies), that won't be a problem. There will be not be much effect on inflation as we have to very quickly put in place a system that compensates the people," he said.
"Nothing dramatic will happen to inflation," he added.
Quah said when Malaysians felt they could be compensated, "we will be in a win-win situation and we will reduce the inefficiency due to the subsidy system".
However, he recommended that the subsidy system be dismantled in stages so that people could get used to the idea.
"Get people to get used to the idea that they are going to be compensated by the transfer of other kinds of direct payment once the subsidies come off," he said.
Originally from Penang, Quah is now an eminent economist in Britain, credited with originating the concept of the "weightless economy" and his research interests include inflation and economic growth. He has been a consultant to the Bank of England, the World Bank and the Monetary Authority of Singapore.
According to Quah, the government needs more accurate information on the distribution of income in order to finetune policies to help the poor.
"We will have people coming in to say they need subsidies because they are in such an income group. Right now the country has 27 million people and about half or 14 million are in the workforce but only one million pay income tax," he said.
"It can't be 13 million people are below income threshold. We have to get better tax records, better information on income statistics," he added.
During his visit here, Quah met Second Finance Minister Tan Sri Nor Mohamed Yakcop and Domestic Trade and Consumer Affairs Minister Datuk Shahrir Samad.
Quah said he had given his views on different aspects of inflation, the problem of subsidies and poverty reduction.
"These are research interests of mine. I happen to be here to give a talk on this and the government officials called to have discussions with them," he said when asked about the topics of discussions during his meetings with the ministers.
Quah said the measures currently being discussed "are all really sensible". "We have variants of the same idea that we need to think hard about dismantling the current system of fuel subsidy," he said.
Asked what would be the best level of inflation for Malaysia if the subsidy system was dismantled in the short term, Quah said two percent would be the optimal rate.
"In the short term, the government understands that shock can hit the system. The removal of subsidies for that year could raise inflation to five or six percent but it would not be an ongoing inflation," he said.
"It is reasonable for inflation to hover around two percent a year. Not much higher than that and not much lower than that," he said. - Bernama
Notes: Blog Prof. Danny Quah [DQ - Unplugged]
Kerajaan digesa hapus subsidi minyak RM56b
KUALA LUMPUR 26 Mei - Kerajaan digesa menghapuskan subsidi minyak yang diberikan kepada penduduk negara ini dengan jumlah subsidi keseluruhan kini mencecah RM56 bilion setahun.
Ketua Jabatan Ekonomi, London School of Economics and Political Science (LSE), Prof. Danny Quah (gambar) berkata, langkah tersebut perlu diambil bagi mengekang peningkatan kadar inflasi secara berterusan.
"Namun kerajaan harus melakukan langkah tersebut dalam beberapa peringkat atau fasa bagi membiasakan rakyat dengan kehilangan subsidi tersebut.
"Selepas subsidi ditarik balik, harga minyak sudah semestinya akan meningkat berganda-ganda dan kadar inflasi juga akan naik sama, tetapi ia merupakan kenaikan sekali sahaja berbanding dengan kenaikan secara berterusan sekiranya kerajaan terus memberikan subsidi,'' katanya ketika menyampaikan syarahan awam mengenai kenaikan dan kejatuhan subsidi di Malaysia di sini hari ini.
Penghapusan subsidi minyak yang dilakukan secara berperingkat-peringkat boleh dimulakan dengan pengurangan sebanyak 15 hingga 20 peratus bagi tempoh enam bulan pertama, tambahnya.
"Apabila subsidi dikurangkan atau dihapuskan, harga barangan akan mula melambung, oleh itu kerajaan harus mencari mekanisme lain bagi membantu golongan miskin atau memberikan pampasan dengan cara pembayaran terus kepada mereka.
"Ini bagi memastikan rakyat miskin tidak terbeban dengan kenaikan barangan keperluan. Bagi melaksanakan pembayaran pampasan, kerajaan perlu mencari maklumat tepat terhadap kedudukan pendapatan rakyat sebelum membuat sebarang pembayaran,'' jelasnya.
Kesan ketara selepas penghapusan subsidi adalah peningkatan kadar inflasi jangka pendek sebanyak lima hingga enam peratus, tetapi peningkatan mendadak itu tidak akan meningkat secara berterusan, katanya.
"Peningkatan inflasi secara mendadak akan menjadikan harga barangan di pasaran mempunyai jurang yang luas antara harga murah dan harga mahal.
"Secara tidak langsung ia akan memberitahu sistem ekonomi supaya berubah dengan meningkatkan pembelian terhadap barangan murah dan mengurangkan penggunaan barangan mahal yang pada akhirnya dapat mengimbangkan harga pasaran,'' ujarnya.
Ketika ditanya kewajaran kerajaan menghapuskan semua subsidi yang dinikmati rakyat kini, Quah berkata, kerajaan harus mengekalkan subsidi lain seperti subsidi makanan.
"Memandangkan keadaan dunia sekarang yang sedang menghadapi krisis makanan, kerajaan tidak boleh membiarkan rakyat menderita dengan menghapuskan subsidi makanan atau beras,'' katanya.
Selain itu, katanya, penghapusan subsidi minyak dapat membantu kerajaan menjimatkan perbelanjaan dan mengurangkan masalah tidak efisien dalam pemberian subsidi. - Utusan
Desperado said...
This should been done a loooong time ago...but they never understand...so how are we going to be a developed country kalau asyik makan subsidi saja?
www.pilihananda08.blogspot.com
June 19, 2008 at 11:30 PM
Letting the time pass me by said...
Kerajaan memang ade alternatif samada nak kekalkan sunsidi atau pun tidak..tetapi yang lebih penting, apakah rakyat negara Malaysia sudah bersedia untuk berdepan dengan situasi tersebut?
Kerajaan bertanggungjawab ke atas rakyat dan bertanggung jawab memastikan bahwa nasib rakyat terbela dan rakyat menikmati kemudahan yang terbaik...
Apakah kerajaan Malaysia telah membuat pelbagai persediaan untuk memastikan bahawa Rakyat Malaysia mampu bersaing tanpa memerlukan subsidi?
I know this guy is a professor, but it doesn't mean that he understand comprehensively the situation in Malaysia... Based on the article published, he is doing most of his research in Britain which has a very different salary caps and different standard of living. The scenario just different.
I have no problem to do away with the subsidy, but the government need to assure that the Rakyat is ready and steps & measures have been taken to ensure that the economic is sustainable. It is important to ensure that the nation is prepared for such cases and it need to address the various measure that need to be taken to ensure that the Rakyat can live a decent lives.
The per capita income in Malaysia is still low compared to the developed nation, and if the government really want to dismantle the subsidy, I think the government need to take a comprehensive details in the Malaysian spending apttern and the allocation of resources to ensure that the economic can move forward and still perform at a commandable rate.
June 20, 2008 at 9:13 AM
anakbuah said...
Sdr Desperado dan Sdr Letting...by,
Saya rasa kita masih boleh menjadi negara maju sekiranya subsidi2 ini diuruskan dgn bijak dan sampai tepat kpd golongan sasaran. "Tuhan" Amerika dan negara2 EU yg maju juga memberikan subsidi yg besar kepada rakyat mereka tetapi mereka pandai menguruskannya sehingga rakyat mereka boleh berdiri sendiri kemudiannya.
Negara kita tidak begitu, subsidi adakalanya disedut oleh mereka2 yg berkepentingan. Contoh paling klasik, bagaimana bekas MB T'ganu sebelum ini membahagi2kan wang royalti minyak yg diubah menjadi "wang ehsan", kononnya. Siapa yg sebenarnya membuat keuntungan dan membelanjakan berbilion "wang ehsan" ini selama 4 thn lepas? Terakhir saya diberitahu, ada lebih RM800juta di dalam akaun Idris Jusoh - bagaimana dia boleh mendapatkan kekayaan ini hanya dgn menjadi MB dlm masa 4 thn sahaja? Itu tidak termasuk perolehan lain yg kita tidak tahu. Dgn hasil petroleum yg melimpah-ruah, T'ganu akhirnya dikatakan menjadi negeri ke-2 termiskin di M'sia selepas Sabah. Kenapa bukan Kelantan yg sudah lama dipinggirkan dan dianaktirikan oleh Kerajaan Persekutuan?
Saya amat setuju dgn saranan Prof Danny Quah, subsidi perlu ditarik balik secara berperingkat supaya ianya dapat diadaptasi oleh rakyat sebelum kita betul2 bersedia dgn 'free market'. Kita kena 'educate' rakyat dahulu dgn berkesan dan sekiranya rakyat mula menerimanya, barulah kita melangkah seterusnya. Negara barat juga berbuat begitu. Australia yg sebelum ini dilanda kemarau memperkenalkan pelbagai subsidi utk peladang2 dan penternak2 dan apabila hujan mula turun dan empangan kembali penuh baru2 ini, subsidi2 tersebut perlahan-lahan ditarik balik oleh kerajaan mereka. Rakyat mereka boleh menerimanya dgn hati terbuka - ianya 'justified'.
Kerajaan kita sebenarnya boleh belajar tetapi tindakan terburu2 menaikkan harga minyak secara mendadak semacam meminta "diajar" oleh rakyat. Rakyat tahu krisis minyak ini krisis global. Tidak terfikirkah pentadbiran PakLah menaikkan dulu sekitar 20-30 sen seliter setengah tahun ini dan menaikkan lagi tahun hadapan sekiranya pasaran minyak betul2 menuju USD200/barrel? Buatlah kenaikan seterusnya selepas rakyat 'settle' dgn sekolah anak dan belanja tahunan lain awal tahun depan, contohnya. Tidakkah semua itu nampak 'logik' dan meringankan beban rakyat yg tidak akan terlepas drpd kenaikan harga barangan dan perkhidmatan lainnya dgn kenaikan minyak w/pun serendah 20sen/liter?
Saya yakin, bukan kuantum yg rakyat pertikaikan tetapi cara/proses kenaikan serta penarikan semula subsidi itu yg lebih penting dan yg membuatkan rakyat rasa tertipu dan marah sekarang.
Anakbuah
June 20, 2008 at 10:13 AM