Apart from worrying about the effects of cuts in subsidies, the lower-income group and even the middle-class are feeling the effects of a sharp rise in fruit and vegetable prices, especially over the last quarter.
While Najib waxes eloquent about the New Economic Model, low-income Malaysians are struggling to balance their budgets. Fruit and vegetables that used to cost RM60 a few months ago now cost around RM90. If you paid RM25 for a basket of vegetables a few months ago, you probably would have to fork out around RM45 now.
Of course, Cabinet Ministers won’t feel the pinch from higher food prices and cuts in subsidies. But ordinary workers will, as their wages struggle to keep pace with the rising cost of living. (As an aside, we desperately need a move towards organic agriculture to make us more self-sufficient in healthy pesticide-free natural food.)
Here’s something I wrote for IPS:
The government’s proposal to remove and rationalise subsidies on essential goods and services continues to provoke a storm of criticism from ordinary Malaysians.
Idris Jala, who leads the government’s Performance and Management Delivery Unit (PEMANDU), has put it in stark terms: Malaysia will go bust in nine years if it does not slash subsidies and cut its government expenditure to curb spiraling debt.
His warning came ahead of Prime Minister Najib Razak’s unveiling of details of his New Economic Model (NEM) in Parliament on Jun. 10, which is when the Tenth Malaysia Plan, a five-year economic blueprint, will be tabled.
The NEM is a market-friendly programme that aims to transform Malaysia into a high-income nation while promoting inclusiveness and targeting aid to the bottom 40 percent of households.
But many Malaysians blame the country’s financial woes on the government, with the general response being, if the government really wants to save money on subsidies, it should first plug ‘leakages’ in government expenditure and curb rampant corruption. Billions have been poured into unproductive government projects with little to show, critics charge. Full article here.
Of course it will hurt the poor. What the government fails to realise is that because heavy duty corruption, we have one of the lowest GDP per capita in the world.
When we do a comparison with other countries, we must see our GDP per capita, Purchasing Power Parity and the Big Mac Index. For example, in Singapore, the GDP Per Capita is US$50,523. In Malaysia, its a pathetic US$13,769
http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)_per_capita
But stupid people will tell us that fuel in Singapore, which is about SG$1 per litre is more expensive than the RM1.80 per litre in Malaysia. They say SG$1 is RM2.50.
What they fail to tell us is that, Singaporeans earn 5 times more than the average Malaysian.
The Kampung people cannot understand this. They cannot see that our ringgit has so low purchasing power.
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Bravo!
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During the public consultation, it was revealed that companies received 18 billion Malaysian ringgits (about 5.4 million U.S. dollars) out of total subsidies of 74 billion ringgits (22.2 million dollars) in 2009. In contrast, the poor received only 1.7 billion ringgits (511,813 dollars).
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You have to check those figures carefully unless you fail your maths as many politicians.
1.7 billion RM is far more than 511,813 dollars.
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First thing to do by the government is remove those wasteful and indiscriminate subsidies to rich people like sugar, petrol, textbook loan, etc.
A real case, I became a textbook loan sponsor for a good friend who earned several millions in a year. His wife wanted to enjoy the government subsidy as many poor rakyat who earns less than RM 24000 a year.
Second thing to do is stop all subsidies to IPPs power generators, toll operators, cooking gas, etc.
Third thing to do is reduce the leaking of public funds due to corruption and poor planning.
What the government should do is re-distribute these subsidies to targeted groups by giving cash to those workers with monthly salary less than RM 3000. These groups should receive at least RM 5000 per head or RM 10,000 per household yearly.
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I do the quick estimate for cash rebate scheme on total subsidies saving in the next five years.
1) First thing to do by the government is remove those wasteful and indiscriminate subsidies to rich people like sugar, cooking oil, petrol, textbook loan, university fees, etc.
Below is statistics for year 2009 with total 74 billion subsidies.
=> Petrol and diesel price subsidy is RM 15 billion
=> Sugar subsidy is RM 720 million.
=> Cooking oil subsidy is RM 850
=> Rice subsidy is RM1.34 billion
=> Flour subsidy is RM 140 million
2) Second thing to do is stop all subsidies to IPPs power generators, toll operators, water, etc.
=> Natural gas subsidy for IPPs is RM 12 billion
=> Subsidy for tolls is RM 800 million
3) Third thing to do is reduce the leakages of public funds due to rampant corruption and poor planning.
=> The losses due to corruption is RM10 billion per year.
My fair and justice solution:
What the government should do is re-distribute these subsidies to targeted groups only by giving cash rebate to those workers with monthly salary less than RM 3000. These groups should receive at least RM 5000 per head or RM 10,000 per household yearly.
How much it cost to give away RM10,000 handouts for needy and disadvantaged groups?
Assumptions:
1. 60% household earning is below RM 3000.
2. Number of household in Malaysia is 6.2 million
Therefore, cash rebate for 3.72 million households with income of less than RM3000 is RM 37 billion per year.
Total cash rebate at flat rate is RM 185 billion for next five years.
3. With 12% increase projection, total subsidies paid by the government is 82.8 (Y2010)+92.8(Y2011)+104(Y2012)+116.45(Y2013)+130.4(Y2014)
= RM 525.45 billion
4. Due to 57% subsidies are allocated for education and healthcare, RM300 billion is considered a must social obligation.
By removing all subsidies except education and healthcare, a total of RM 225.45 billion can be saved.
Net saving for next five years is RM 40.45 billion. (compared with RM 103 billion package suggested by Pemandu.)
The opportunity cost of corruption and leakages is RM 50 billion, waiting to be tapped by our government.
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nkkhoo,
You contradict yourself and become a hypocrite. You wanted to remove subsidy but on the other hand sponsored for someone. Worse still you committed an offence by sponsoring some one whose salary is more than RM700/= (Only those with less than 700 can apply for text book loan.) Even worse you sponsored a millionaire.
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Very good suggestions. But those in power today joined politics to do the exact opposite. Its like lecturing a thief on how to look after your house.
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Of course lah. Everything will rise like hot air lah. No more peace of mind for the poor chaps lah. Got money never mind lah. No money sure die lah. The rakyat have to wake up PR by endorsing PR in the next general election lah. If the rakyat don’t do it, who to blame lah. Die lah.
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It is about number game, how voters are divided…
Kampung folks is still BN fixed deposit and until they realise how bad BN is, chances are BN still rules this beautiful land.
Do our part. Share with others fact and information.
Good luck to all Malaysian.
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Cancerous Disease
Kill the cancerous disease and the patient will survive, likewise get rid of the root cause and the Nation will survive and thrive.
It does not matter what they do because whatever they do will be to no avail. Like RPK said in London, it is no good attempting to treat the symptoms because it just simply will not work. It is the cancerous disease that should be treated. So therefore as long as UMNO is in the driver seat then absolutely nothing could be done. Before anything else, UMNO will first have to line their pockets, then their families pockets, then their cronies pockets and then whatever morsels left to the selected segment of the rakyat. So how much is enough? It does not matter how much natural resources Malaysia possess for come one day these resources will eventually be exhausted. Then what?
Be like Singapore one might suggest. But do our leaders have that mentality and maturity to do so? With the present government – not by an extra mile mate!
Now the UMNO BN Rogues will bankrupt the Nation’s Coffer and cut subsidies to rob the poor and to subsidize their rich crony Tycoons so that the benefits can go back to them on demand. All the poor rakyats were having a bad deal since 53 years ago with them in power not once did they not squeeze the Rakyats with taxes after taxes now they will try to impose GST 4% on all levels that will resulted in more 16% taxes imposed on all ordinary basics consumers’ goods from materials Suppliers, manufacturers, wholesalers to retailers. Now they are trying to cut subsidies but they are not cutting back taxes but instead increased the taxes.
Also it was discovered that they (allegedly) have their cronies increased the prices of foods such as vegetables and fruits included, also they have (allegedly) allowed their cronies to increase the prices of all basic construction materials including cement and steel to further squeeze the Rakyats’ well being of a reasonable survival in these bad times.
So what can we the rakyat do? Well we can change all these just by a stroke of the pen. Quoting RPK, ‘We the rakyat is the boss’. So come GE13 with the stroke of the pen, we could effectively change the government and consign UMNO/BN to the gutter. Well not totally to the gutter but enough to effect them to be the opposition as at the end of the day checks and balances are still needed irregardless of who is forming the government on that day.
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Silly question! Should go & ask Mr Najib.
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RM10,000 cash rebate to 40% low income households is a better and more effective mitigation plan
There is no dispute 61% people who answered Pemandu survey agree subsidies have to be trimmed down. The question is what is the best mechanism and how best to minimize its impact on our poor people and nation competitiveness.
I would like to propose an alternative approach which I deem is benefiting targeted poor rakyat than selective companies and foreigners.
Let see how this Turkey therapy approach works. IF government withdraws all subsidies except education and healthcare services immediately.
Based on these assumptions from various official sources like Statistics Department, Pemudah, etc.,
- 40% household monthly income is less than RM2000.
- There are estimated 6.2 millions households with 4.5 average headcounts per household.
- Subsidy is treated as debt, growing at 12% per annum from 2010 till 2014.
- 57% subsidy is allocated for education and healthcare services.
Total projected subsidies paid by the government for the period from 2010 to 2014 is 526.45 billion, with RM300.10 billion is for education and healthcare services. Hence, by removing all subsidies except education and healthcare, a whooping RM 226.35 billion can be saved.
Next is how much the budget is needed for RM10,000 cash rebate scheme for households with less than RM 2000 monthly income?
There are 2.48 million qualified households, therefore the budget for cash rebate scheme is RM 24.8 billion per year or RM 124 billion for next 5 years.
Net saving for five years period is RM 102.35 billion, close to RM 103 billion package suggested by Pemandu.
The advantage of cash rebate scheme is subsidized money go to hands of needy rakyat directly. Besides, no more distorted market price for essential goods and people will be more prudent and cautious in their spending. Also no more smuggling of subsidized goods to foreign countries.
Low income rakyat should be able to cushion one-time shocking inflation with hard cash on their hands to spend.
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Is this a serious question? Its not whether it will hurt the poor, the issue is can the govt mitigate the impact i.e., soften the blow.
The reason why the opposition is so strong is because everyone know BN govt ability to mitigate impact of such things is really crappy. Talk to any rice farmer, fisherman or those that do social welfare service. BN have one of the worst track record of removing programs and susidies. The way BN govt have mitigate past failures e.g. with toll roads, electricity, telcos etc. is by getting high economic growth and huge spending. That gravy train has slowed down a lot while the demands have increased.
That is why the issue boils down to NEP vs subsidies or cronies vs the masses. The bargain is that simple. The cake to divide has shrunk and the masses says its not their turn to give up their share first.
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Poor? what poor people? does the government know what poor means?
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With subsidy gone and the intoduction of GST, the poor will be in living hell. The only way is for these poor people to wake up and kick out the corruptible UMNO/BN and Najib once and for all. One of the most important services that the poor people will need is health care and government hospital fee will soon increase. So kick (out) these (people) from UMNO & BN and of cousre the PM Najib.
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….aiya,(so pathetic) day in day out, we rave and rent, worry and tear our hair out, while people like those with pinked lips and some fat mammas without waistlines GORGE themselves with ‘opulent ceasar/roman’ table styled caviared food, a situation prevalent now BECAUSE all the time, our leaders have been deciding/implementing nem/neps, that are deliberately lopsided, just to appease some, who are not WILLING to strive, or to do a simple hard day’s work, adhere to meritocracy’……..in order to achieve their status/ their means of (high?) living by themselves honourably……………………stop for awhile, think who has brought on this heart breaking/wrenching plight that besieged the lowly/poor, rural padi planting/rubber tapping folks , the ALSO poor chinese alleged “prostitute/second class immigrants(?)” citizens(citizenship given upon/after merdeka declaration ONLY because they were perceived as loyal?) and last but not least, the very much less minor but important ‘king maklers’ too less majority indians, who HAVE been vehemently/despicably branded as ‘east india company’ sent to malaya as field(ladang)labourers, gangsters/car stealers and beggars…………………how did this deplorable situation come about, one might wonder……………………….well it is easy to comprehend, if one was born before or just after merdeka, to realise that because the whole nation of malaysia (definitely NOT lmalaysia for one race only?)………MOST people voted for the ruling/coalition party then and now , because most of us being chinese, malay or indians THOUGHT that by voting in the ‘ ching toh’ barisan scale of ‘equality/balance’ of wealth to be distributed to all races,………would BRING in fairness, support in all aspects of happy/satisfied and fair living in the context of jobs, scholarships, religion etc., etc………….. but alas, here we have one particular race, without lifting a finger, that/who wants to HAVE the cake and EAT it, all(contrary to what the kedah prince/ist prime minister of Malaysia aspired……………coming back to WHY this situation has been so deeply QUAGMIRED so………………it is until now SO because one main urban race refused to admit that they have long been UNWITTINGLY pushed aside/neglected….and even so… they still cling to the forlorn HOPE that their forlorn quest to seek a better living for themselves and their (future?) generation …..their hard pressed daily lives/hard to juggle/ spendings, their food problems on their humble table each day, let alone, send their children to schools/ college (for a BETTER tomorrow!)…… WOULD one day be ALLEVIATED by their local DUNS and PARLIMENTARIANS of their respectively districts that they have ignorantly voted in… that every 5 years or so when general election comes they(the voters that still voted the ruling party in)will still VOTE with the ‘herd mentality/ketuanan’ stance for the now ‘unbalanced’ blue/white scale/dacing…………NOw for those of the poor rural/urban folks of the races(albeit the chinese who have largely ABANDONED/DESERTED/SWUNG OVER TO THE OPPOSITION IN THE HOPE OF CREATING A 2 TIERED SYSTEM OF good GOVERNANCE IN THE NEXT (13TH) GENERAL ELECTION?)….it is time for them to LOOK at the larger picture, else they WILL never SEE the Trees in their Forests/Belukar(kampungs/’cow infested’ ‘buah pala typed’ villages????!!!!)……
……ANIL we all know that you are doing a wonderful job , exposing the ills of the down trodden….but if the ‘king makers’ of past voters DO NOT come to their senses ….all your gallant/hard efforts MAY not see fruition by the time the GE 13 th arrives……nevertheless, we DO HOPE and PRAY that with pure common sense and hindsight and more opening up of the net exposures of corruption news for the hardcored older rural folks by their more educated city savvy children, we, inclusive of the ‘majority of the pushed aside master’ race will HAVE to vote wisely , importantly, not according to race basis ……..or else we WILL forever beDOOOOOOOOOOOOMED to survive only/mainly on HUM YEE(chinese adage for MEAGRE table servings….sek ‘hum yee’, no meat or anything sustainable/lavish))……in their everyday servings of rice on their table, …….in their everyday lives, each day, SURELY as the heavenly SUN rises and sets everyday……good luck, anil, and to all the honourable humble ‘second tiered’ people who live in the LAND OF MILK nd HONEY, above and BELOW the wind????????….so let’s hope with a better networking and continuous exposure of the wrongdoings of the decadent ruling party…..the all mighty ‘king makers’ may find it worth while to reconsidering voting mainly on points/meritocracy wisdom instead of race or herd menatality……thanks anil for all your efforts….i am pretty SURE…..things WILL be different with peoplewlike you, rpk, din merican lim kit sian, liew chin tong, ronnie liu susan loone malaysiakini malaysia inside, etc., etc. HARRASING the ruling for a good cause etc., etc…….
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…..sorry….correction ……””””to rave and rant’…….
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What about the biggest subsidy the rakyat has given the government? Cars.
Proton Waja in Malaysia is sold double the price sold in Saudi Arabia.
So, how can now the rakyat reduce their subsidy having given 25 years of car subsidy and free money to the government?
http://blog.limkitsiang.com/2010/05/25/proton-cars-price-in-saudi-arabia-raw-deal-for-malaysians/
If each rakyat overpays by RM30,000, calculate that by the hundred of thousands of protons being sold.
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Proton cars are much cheaper in all overseas markets, not limited to Saudi Arabia.
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[...] Netto also concurred by saying: Many Malaysians blame the country’s financial woes on the government, with the general [...]
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