Malaysian Insider
By Shazwan Mustafa Kamal
May 27, 2010
KUALA LUMPUR, May 27 — DAP’s Tony Pua grudgingly admitted today that cutting subsidies could lower Malaysia’s debts, but he said the cuts will only be successful if leakages from graft and help for big corporations are plugged first.
“I feel that in general, the points raised were agreeable. But at the same time, these plans can only be put into motion if other conditions are first met.
“He (Datuk Seri Idris Jala) was quite naughty when he said that Pakatan Rakyat (PR) agreed with lowering subsidies. We agree to it but with conditions,” DAP National Publicity Secretary Tony Pua said shortly after he attended a government open day on rationalizing cutting subsidies.
The Petaling Jaya Utara MP told The Malaysian Insider that while the government has outlined ways in which to gradually lessen subsidies, other “main causes of debts” had not been carefully addressed.
According to Pua, the issue of subsidies was a small problem compared to the actual cause of Malaysia’s huge deficit problem.
“The focus right now is too restricted to subsidies to the man on the street. The focus is too much on dealing with subsidies to the man on the street. We need to look at two key aspects,” said Pua.
The DAP man claimed that the main cause of debts was due to huge government expenditure where major problems of wastage of funds and corruption remained unsolved.
“The main cause of debts is government expenditure… this has been admitted by the Auditor-General amounted to RM28 billion. This is the often quoted figure of waste by the government.
“(Besides that) we see things like the giving out of interest free loans to private companies like Syabas, those are examples which must be addressed. Subsidy is only one of the smaller factors,” said Pua.
He reiterated points that DAP and PR had brought up during the last Parliamentary session where there have been “gross leakages” in government procurement contracts. Malaysians were also not granted proper access to some government tenders.
The government said earlier today that it will save RM103 billion over the next five years if it starts to cut subsidies now.
Idris, who is in charge of the Government Transformation Plan (GTP), said Malaysia had a whopping RM362 billion debt and must start reducing subsidies amounting to RM74 billion last year to avoid becoming a bankrupt nation by 2019.
According to the minister, the government had spent a total of RM74 billion on subsidies last year.
Idris outlined areas in which the government could slash its spending on in order to increase the country’s per capita income.
Areas which have been identified include fuel, food and infrastructure as well as tolls.
“The government subsidy bill, it is not just about the amount of money to the man on the street, it is also amount of money given to big corporations, crony companies, if you like.”
“I think IPPs (Independent Power Producers) was highlighted quite well up there, they take about RM13 billion in gas subsidies per year. Compare that against food subsidy bill, RM3.4 billion. Where should the government be focusing their attention on?” said Pua.
Pua stressed that more money could be saved if the government stopped doling out cash to giant corporations.
“A lot of plans proposed today can only take place after certain benchmarks are achieved. You cannot increase electricity rates without first dealing with fat profits IPPs are making.
“If you increase the burden on the people but you maintain the billions of profits for IPPs that would be a very unfair policy, (then)you are creating an additional burden,” he said.