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Election Watch

Subsidy Liberalisation: Harsh But Necessary

Subsidy predicament: Malaysia has waited too long to phase out fuel subsidies

With the proposed implementation of the Goods and Services Tax (GST) in 2015, the abolishment of sugar subsidies and the upcoming hikes in electricity and toll prices, Malaysians are looking at an upcoming period of inflationary prices. Prior to Budget 2014, Treasury Secretary-General Tan Sri Dr Mohd Irwan had already suggested the complete elimination of existing subsidies, describing it as `a gradual liberalisation towards the market’. As we approach this period with caution, will this further implicate the rakyat’s lives?

As commonly practised globally, subsidies are provided by the government during the infant stages of an economy, especially in the energy sector. By maintaining a low cost for transportation, it stimulates demand for spending while industrial firms can operate at competitive costs.

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