Rice subsidies not working out

The AG's report found that the government's management of rice subsidies is not achieving its intended objective.

KUALA LUMPUR: The government’s aim to provide rice subsidies for the lower income group has not benefited the target group, the 2011 Auditor-General’s report stated today.

The report stated that the programme, managed by the Agriculture and Agro-based Industries Ministry and the National Rice Company (Bernas), did not ensure a proper mechanism was in place to ensure the target group had benefited.

The rice subsidy programme of 15% broken rice, implemented on Sept 1, 2008, was to ensure a controlled supply and price of the rice to the low income group.

The objectives of the programme are to supply Super Tempatan ST15% rice in the Peninsular Malaysia and S15% rice in Sabah and Sarawak to meet rising consumer demand and maintain controlled subsidised rice price at RM1.65 to RM1.80 per kg by zone and cover losses incurred by subsidised rice manufacturers.

“Audit findings revealed that the objectives of the programme were not fully achieved where there was no proper mechanism to ensure that the target group benefited from this programme,” said the report.

The report also pointed to several other weaknesses in the implementation of the programme.

It said data of the targeted group/consumer in Peninsular Malaysia for the scheme was not attainable while allocation to pay subsidy claims was insufficient.

There were unclear guidelines and delay in signing the contract between the ministry and Beranas. It also said that there were contracts signed only after the contract had expired.

The report also highlighted the insufficient number of officers to monitor the effectiveness of the programme.

It said the government should re-evaluate the existing rice subsidy regime and improve its data management so that the targeted groups would benefit from the programme.

It also noted the ministry’s weak enforcement against wholesalers found breaching agreements as one of the reasons behind the scheme’s ineffectiveness and urged the government to produce a clear guideline to ensure the programme’s success.