Daim: Fuel subsidy reform proposal to be presented to PM this week

The Council of Eminent Persons will present their proposal on fuel subsidy reforms to Prime Minister Dr Mahathir Mohamad as soon as this week.

Led by the two-time Finance Minister Daim Zainuddin, who believes that everything must be done on time, the council has so far carried out more than 200 meetings with various heads of agencies, companies and individuals since its inception a month ago, studying various issues particularly on fuel subsidy, toll charges abolition and removal of the GST.

He said they had numerous meetings with relevant stakeholders on the best way to reform the fuel subsidy before deciding on the proposal.

The soft-spoken long-time confidante of Mahathir, once dubbed the ‘Godfather of Corporate Malaysia’, however, declined to elaborate further, but pointed out that the fuel subsidy would be a targeted subsidy.

Encouraging feedback

In an exclusive interview with Bernama, Daim, who was once the economic adviser to the government after leaving the cabinet, said the council was also fully aware of the financial impact on the market from the toll charges abolition.

"While we want to reduce the toll for the rakyat, we are also aware of the impact on the market if tolls are abolished immediately, he said.

The council is currently looking at various options on how to deal with this issue, and is guided by the principle that the decision made will be phased and structured.

This will ensure that the end outcome will be fair to all stakeholders.

“So far, the feedback from the rakyat is very encouraging. No need to abolish toll immediately, I mean they understand. They know it was mentioned in the manifesto, now that reality has come in, they understand the financial position and the problem.

“We have worked all these things up. We will try to do in such a way that it balances everything. The market will be happy, the owners are happy and the consumers are happy,” said the 80-year-old who believes in hard work and determination.

The toll abolition was one of Pakatan Harapan’s election promise in the run-up to the 14th general election.

'Mega projects didn't make sense'

Daim also explained that the announcements to cancel and review mega projects did not mean that the government was shifting the focus of the economy.

It simply is driven by the fact that some of these projects do not make any sense.

For example, he said the MRT projects cost a lot of money.

“Just compensation for the land is huge. And it’s only in Kuala Lumpur, what about other places?” he quipped.

He added that the economy remained largely driven by domestic demand with private consumption spending accounting for 54 percent of overall GDP.

As such, the government is merely being fiscally responsible in expenditure to manage fiscal debt position, he explained.

“Any projects that benefit the rakyat should be continued, but we have to review all projects to make sure that they are cost-effective and no hanky-panky is involved,” said the diminutive tycoon who is known to keep a tight control on finances during his corporate days.

Rationalisation can soften GST blow

Meanwhile, Daim also expressed confidence that revenue from the new tax regime and the savings from rationalising operational expenses can cushion the possible revenue shortfall from the scrapping of the GST.

The government is also undertaking reforms to ensure wastage and leakages are minimised.

“That RM43 billion (revenue from GST) is excluding the refunds. In the 1980s I wanted the GST. Other countries also have GST but the money collected goes back to the rakyat. Here it only went to BR1M.

“That is why the rakyat is upset. Here GST is charged from the time before you were born until you die whereas, in the western country, GST take care of you from the time you were born until you die,” he said.

The council expects positive market confidence, said Daim, as the government has reiterated its stance to be transparent, pursue measures to eradicate corruption, undertake prudent fiscal spending and managing the debt situation.

“The investors should welcome these measures. The confidence must come back, it will take a little bit of time. Now the people are watching to see what the government is going to do. The government must be consistent, make sure everything is planned and implemented properly,” Daim said.

The market, he said, would always react when there is something they are not happy with.

“We have to make sure to explain to them why we do certain things.

“In the end, the rakyat must support what you do, then it would be successful,” he said, ending the hour-long interview with a grin.

- Bernama