Weaning off subsidy mentality

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"Weaning Off Subsidy Mentality" by Cecilia Kok published on The Star, 9th January 2010, discuss the issue of subsidy in Malaysia and the effect on removal of financial support towards Malaysian. Initially, government help citizen by subsiding assorted goods to sustain the goods and services price low when Malaysian earning power is low. However, through development, Malaysia has progressed to a upper middle-income nation. As we foresee subsiding in long term period, a large sum involved and the system is expensive. In addition, with the cheaper goods and services price, it has cause excessive consumption and wastage. In fact, subsidies could be lower and duties can be invest into other profitable expansion for long-term gain of the citizen. During deep slump, in order to improve and maintain Malaysia economy government needs more resources to carry out projects. Hence, government restructured the subsidy scheme. The lower subsidy in sugar by 20sen per kg and price for a loaf of bread increases around 20 to 45sen. It is also estimated that there are changes in oil and rice subsidy to save more. The Government should take actions to avoid the subsidy mentality entrenched in our society. Besides, the subsidy reduction should be done gradually allowing Malaysian to adapt to the change.

Firstly, the succession of Malaysian from a poor class to upper middle-income status has been proven in the Star newspaper dated 9th February 2008 which states that, "Malaysia's per capita income rose by 40% in 2007 compared with 2004, said Second Finance Minister Tan Sri Nor Mohamed Yakcop. He said the per capita income was now RM22,345 (US$6,452) compared with RM15,819 (US$4,163) previously." Hence, I agreed with Bank Islam chief economist Azrul Azwaar Ahmad Tajuddin that not everyone in Malaysia need subsidies. Majority of the citizen have the ability to earn and spend without subsidy and burden. Usually, people categories under high-income or upper middle-income group are people that spend more compare to the low-income group as they have higher spending power. For this reason being, high-income or upper middle-income group consumer tend to enjoy more subsidy when they spend more. Secondly, the government restructuring the country subsidy system might influence the ruling party reputation. In my opinion, I do not share the same thoughts. No matter who is the Prime Minister of Malaysia, government need finance in term of taxes and trading resources to develop the country. People cannot be only dependent on government subsidy, because if this continue long term it lead to country negative cash flow and face the money shortage problem. If we do not responsible for our own little expense, then Malaysian government need to pay off 28 million citizens subsidy in total, which sum up to an uncountable figures after a long time subsidy deposition. Thirdly, the decrease in subsidy led to lower consumer buying attitude. In my point of view, this might be just the influence from economist where they say the reduce of subsidy causes increase in Consumer Price Index (CPI). As a result, the increase in goods price, consumer get panic and they have no one to turn to, then concept of economist appear and manipulate people not buy hence lower the buyer sentiment. Fourthly, the raise of price of goods like sugar and bread affected the CPI. In my thoughts, I think that sugar and bread is not an essential goods where we can reduce the usage of it. Besides, with reducing consumption of sugar can effectively reduce the diabetic patient in Malaysia. Although the subsiding of petrol price is reasonable as Malaysia is one of the oil producer country, besides the citizen pay taxes, however, the exploring and producing of petrol incur huge sum of money. Thus, why does government need to pay for usage of oil for its people? No one specify us that all Malaysian must drive, driving is just for the convenience for ourselves, we can take alternative way for example taking subways and buses to reach destinations. This not only safe our natural resources but also lower the pollution rate to safe our environment.

In conclusion, in order to make the subsidy scheme work, government should focus more on the promoting of the programme. The government should educate the people, implant the advantage of the system towards the people and make statement clear on country financial position and performance. This help the citizen to understand their country more and agree with the current ruling political party. Besides, with the reduce in subsidy government should come out a guideline to increase salaries in helping the low-income group people to survive. With the reduction in subsidy, government have additional fund in managing the country, hence, government should reduce taxes to trim down the burden of its citizen. Lastly, the government can follow country like Australia, Thailand and United States by setting its goods price according to the actual international market value from time to time to lessen the government burden in subsiding.