Potong, Potong, Potong!

Subsidy cuts, here they come. It is an important initial step towards structural reforms in our country as outlined in the New Economic Model (NEM). It does look like the government is looking at a three to five year time frame to gradually phase out bad subsidies & this should provide ample time for the rakyat to "ubah gaya hidup" :)

If you don't know, the quantum of our subsidy cuts are actually recommended by a task force known as PEMANDU, short for Performance Management and Delivery Unit. Under their recommendation subsidies this year should be cut to a point that it will save the government RM1.3 billion. But the recent announcement in price hikes will only result in a saving of RM750 million. Now there maybe another price hike still lurking within this year.

Price Increase on July 15 2010

PEMANDU has earlier suggested that the price of fuel be raised to 15 sen instead of 5 sen, which is to be followed by a 10 sen adjustment every six months until Dec 2012. Walao kenot le so expensive, then carpool la. Take some time and observe awhile during traffic. Most of the cars have only the driver, true right? The initial 5 sen increase in fuel was a more gentle approach by the government which I feel not bold enough. Look at Indonesia's bold approach in economic reforms taken by their leaders.

What other bad subsidies do we have? It is actually a matter of time before we will see the removal of subsidies on electricity, flour and gas. So far the govt has pledged a 40% reduction by 2013, and total removal a year later. Now will be a good time to invest in solar products. I say only ah.

This is the full picture. Govt debt has now ballooned to RM362 billion in 2009 which is approximately 54% of our GDP. Halfway to becoming Greece. It is imperative that we make changes in order to save money. Well I'm not saying only the rakyat plays a part, the government has to do something as well.

Some 97% of subsidies given by government benefits everyone regardless of income. Certainly the govt has to amend this issue and only provide subsidies to the needy only. Our independent power producers (IPP) are being subsidised RM13 billion a year. For what?! Do they really can't live without it? The government also needs to plug other leakages from corruption and inefficiency. Open tender basis must be embraced. Just look at the MRT mega project being awarded straight to UEM for RM30 billion. Does it make sense? There should also be a reform in our civil service which is now packed with 1 million workers that is one civil worker for every 25 Malaysian. It is still growing and this is a good example of inefficiency in the making.

There shouldn't be anymore white elephant projects and over bloated allocations to towards some projects. If the current govt fails in doing that, you know what to do :) Prudent, wise and productive spending is key for our nation to survive in the next 10 years. Love your country, it is still not too late.