Najib talks about further subsidy cuts

Through his blog posting, PM Najib hints between his message that Malaysians may be facing the stark realities of having more subsidies removed in the Budget 2014

KUALA LUMPUR: In defending his move to rationalise subsides, far more with the recent increase in fuel prices, Prime Minister Najib Tun Razak went on social media via his 1Malaysia blog to explain further on his actions.

In his posting titled “Responsible steps in managing subsidies”, Najib said that in view of uncertainties in the global economy, Malaysia was not immune to downtrends though it has seen rapid growth.

“I believe it is important for us to rationalise a few current subsidies to hover the global economy of today, including fuel subsidy,” said Najib.

He further said that though the government has reduced fuel subsidy by 20 sen, it still subsidises the RON95 and diesel by 63 sen and 80 sen per litre respectively.

RM24.8 billion was allocated in 2013 for fuel subsidies, according to Najib.

He further strengthened his arguments by comparing the fuel prices in other Asian countries, claiming that prices here are still much lower.

He affirmed that a litre of RON 95 in Thailand was RM4.74, the Philippines RM5.44 and Indonesia RM3.05. He also went on to say that in June this year, the Indonesian government was forced to increase fuel price by 44%.

He said “though it was not well received and an unpopular move, nevertheless the Indonesian government realised that it must take necessary steps to improve its economy.”

Najib also lamented that Malaysian imported petroleum due to the high local consumption.

“I believe we must take long term measures to reduce dependence on government subsidies now, in order not to burden our future generation. Malaysia is a small nation in petroleum export but our domestic consumption is very high.”

“We are forced to import petroleum from other countries to meet domestic demand,” he said.

Accept with open heart

Najib stressed that Malaysia could not take irresponsible fiscal steps by continuing to dish out RM10 to RM20 billion from the country’s finances for fuel subsidy.

On the contrary this money can be channeled towards more important sectors like education and infrastructure enhancement.

He even went on to say “cutting back on subsidies is heavy to be accepted by some pockets of the society and we understand this, that’s why I have to convince all Malaysians, especially the lower income earners that appropriate steps will be taken to assist them in overcoming increased prices.”

He promised that the government will implement steps gradually and all price controlled goods and services will be monitored to avoid irresponsible parties exploiting the situation.

“I hope these necessary steps will be received well with an open heart by all parties and cooperate towards our objectives to become a high income nation,” said Najib.

The recent hike in fuel price has sent rippling fears among public that more subsidies will be removed come the 2014 budget that will be tabled this Friday. There may be a spiraling effect on prices of goods and services with reduced subsidies across the board.