Exempt Sabah from the subsidy cuts

Traders are already preparing to pass on the additional fuel cost to consumers, says PKR

KOTA KINABALU: Sabah, which houses the nation’s poorest people, should be exempted from the government’s ongoing move to cut subsidies for essential items.

PKR supreme council member Roland Chia said Sabah is one of the three major oil producing states in the country besides Sarawak and Terengganu and had contributed significantly to nation-building all these years but had remained poor.

He said the removal of the super subsidy for diesel next month will have a major impact on Sabahans who are already paying higher prices for goods than their counterparts in the peninsula.

He said traders affected by the move are already preparing to pass on additional fuel costs to consumers.

“Such a move will definitely burden the ordinary people. It is inevitable that the transportation sector will pass the bulk of the increase to the consumers and manufacturers to safeguard their profit margins,” said Chia.

He was responding to the recent announcement by the Domestic Trade, Co-operatives and Consumerism Ministry that diesel subsidies for nine categories of commercial vehicles would be abolished effective June 1.

The nine categories comprise prime movers, general cargo movers, Luton box vans, vans, rigid lorries for bottled beverages, rigid tankers for flour transport, rigid lorries for refrigerated goods, water tankers and limousine taxis.

Chia also regretted that the government has refused to first cut billions of ringgit in subsidies for independent power producers (IPPs).

“The government would only spur inflation by removing the diesel super subsidy before cutting gas subsidies worth RM19 billion for IPPs and commercial power sectors.

“This selfish move will definitely push the middle income to lower middle income group and the lower group towards the poverty level,” he said.

Cut subidies to IPP

Arguing that the government should take the subsidy knife to “fat crony companies” like IPPs, he said last year’s five-in-one subsidy cut would only save RM750 million while a 20% cut in subsidies to IPPs would save RM3.6 billion.

In 2008, based on Petronas’ annual report, gas subsidies granted to IPPs amounted to RM8.1 billion, while Tenaga Nasional Bhd (TNB) took RM5.7 billion.

Chia said the first cuts should be on the salaries of the top management of TNB and Petronas which amounted to up to RM1 million per annum per director.

He said subsidy cuts in order to reduce deficit is a clear indication of the failure of the so called Government Transformation Programme (GTP) and Economic Transformation Plan (ETP).

He said it also showed that the government is incapable of generating additional revenue to ease the burden of spending as well as its inability to cut leakages of public funds caused by corruption and poor project implementation.

“This is reflected in the RM28 billion lost annually to corruption, estimated to have cost the nation up to US$100 billion (RM303.06 billion) since the 1980s,” said Chia.