Tuesday 7 June 2011

Price hikes senseless without IPP gas subsidies cut, says Guan Eng

June 07, 2011
KUALA LUMPUR, June 7 — The refusal to cut subsidies to independent power producers (IPPs) has made a mockery of the Najib administration’s claims that its subsidy policy is designed to help lower-income groups, Lim Guan Eng has said.

The DAP secretary-general said the removal of subsidies for sugar, diesel and other essential goods to help reduce the government’s budget deficit made no sense if not accompanied by similar cuts to big-ticket items like IPP gas subsidies.

“Are IPPs amongst the eligible and needy target groups when they earn billions of ringgit in extraordinary profits from enjoying RM131.3 billion in gas mega subsidies?” he said in a statement today.

Lim (picture) said if subsidies were “like opium”, as described by Prime Minister Datuk Seri Najib Razak, the government should first remove “big opium” like the gas subsidy and corruption, which costs the country RM28 billion annually.

“Any people-centric government would do that first before removing the ‘small opium’ of subsidies in sugar, diesel and petrol which hurt directly the masses, 10 million Malaysians who do not even earn enough to pay taxes,” he said.

He also pointed out that it was hard for poor Malaysians to maintain their standard of living in the face of subsidy cuts and stagnating wages, which only increased by 2.6 per cent in the past decade.

Lim said subsidy reduction could improve competitiveness and efficiency if accompanied by measures like minimum wages and real wage increases, which were needed to build a more equitable and prosperous society.

He said economic policies that favour job creation, wage increases, sustainable industries and innovation were essential to develop a services sector and consumption-based economy that could help transform Malaysia into a high-income nation.
Deputy Prime Minister Tan Sri Muhyiddin Yassin has said the government expects the subsidy burden to double from RM10.32 billion to RM20.58 billion this year.

Najib also said fuel subsidies were “like opium” to the Malaysian economy and would have to be gradually slashed as the initial bill of RM11 billion for this year has soared to RM18 billion due to escalating crude oil prices.

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