Subsidy cuts political suicide for Najib

KUALA LUMPUR, May 28 — Lawmakers from both Barisan Nasional (BN) and Pakatan Rakyat (PR) have agreed that an immediate implementation of any subsidy cuts would spell political suicide for the Najib administration with the next general elections within the next 34 months.

They believe that subsidy cuts will likely be implemented in stages, and that a full-fledged slashing would only be exercised in the future, or at least after the next general election. The last general election was in March 2008 where BN lost its two-thirds parliamentary majority.

Minister in the Prime Minister’s Department Datuk Seri Idris Jala had disclosed proposed cuts that can save the government up to RM103 billion in the next five years but most critics say Datuk Seri Najib Razak must weed out corruption and leakages within his administration.

“With the elections coming soon, I don’t see the government cutting subsidies anytime soon. They are not going to implement it immediately,” said Selangor opposition leader Datuk Seri Dr. Mohamed Khir Toyo.

Khir told The Malaysian Insider that the the government will not risk angering the public by cutting off all subsidies.

“The word ‘cutting’ is in itself a negative connotation...The government is doing their best to get feedback from the public.”

The Umno man argued that instead of cutting subsidies the BN government should find alternative ways to “increase the country’s income”.

“For instance, education is important, (the government) must study carefully. They need to see implications of restructuring subsidy, not everyone will like this. The subsidies must go to target groups.

“Take fuel for instance. The government can cut off subsidies for RON97, but subsidise RON95,” said Khir.

Former Domestic Trade and Consumer Affairs Minister Datuk Seri Shahrir Abdul Samad echoed his Umno colleague’s points, and said that any implementation has to be in stages to be “political acceptable”.

“Even if it were to be implemented before the next general elections, it would be done in stages, It will be quite selective to be politically acceptable. I don’t think it will be implemented in total yet, there will be amendments,” he told The Malaysian Insider in a telephone interview.

The Johor Baru MP claimed that any immediate implementation would have no “redeeming feature” that would make it acceptable to Malaysians.

“If you were to implement it now, there will be no redeeming feature. It will still need some fine-tuning. That is why the government is still open on the issue. I don’t think the government will do it.”

He said that what was lacking right now was a comprehensive database to determine target groups who needed financial assistance.

“We must have a comprehensive database in order to determine targeted groups. There has to be a proper database which takes into consideration people’s income tax levels, KWSP (Employees’ Provident Fund), Welfare department and JPJ (Road Transport Department).

“As far as I know, we do not have a database which is compiled on income levels, that is comprehensive,” said Shahrir.

He stressed that slashing of subsidies would need to be done in many levels of restructuring, citing for example how the public transport system would need to be restructured so that the hardcore poor would be able to benefit from it.

The Umno MP agreed that wastage of money was also a reason why the country’s debts were at an all-time high, but claimed that the cost of subsidies were higher than wastage by the government.

“The RM28 billion figure, it was not announced in the Auditor-General’s report. While I do not deny that there is wastage of projects, the RM28 billion figure is not true. That figure was first reported in The Star newspaper some time ago,” he said.

Pulai MP Datuk Nur Jazlan Mohamed said that ultimately it was up to Malaysians to decide on whether they were ready for subsidy cuts, as it was merely on a proposal stage.

“It is up to the people to decide. The lab was done in order to get feedback. If they are acceptable to slashing of subsidies, then the government will go ahead . If they are not agreeable, then the government won’t go ahead with it,” said Nur Jazlan.

Meanwhile, Pakatan Rakyat (PR) leaders have agreed with their BN rivals that full-fledged subsidy cuts will not be executed anytime soon.

“Politically, I think it is suicidal for them,” PAS treasurer Dr Mohd Hatta Ramli told The Malaysian Insider today.

“If they do it (cut subsidies) in a hasty manner and in an amount that will not be tolerated by the people...people will be angry,” Dr Hatta added.

DAP national publicity secretary Tony Pua agreed, saying that BN’s slim win of the Hulu Selangor by-election and their failure to retain the Sibu seat would likely stop the federal government from going all out in slashing subsidies.

“Because they only won marginally in Selangor and they lost Sibu, I think they may not cut as extensively as they would have liked,” said the first-term Petaling Jaya Utara MP

“I think there is no question that the vote bank of Barisan Nasional will be severely affected,” he answered when asked how subsidy cuts would affect public sentiment.

On whether BN would implement the drastic move before the next general elections are called, which may be held as early as next year, Kuala Selangor MP Dr Dzulkefly Ahmad said that Najib would not risk going against public opinion.

“I don’t think he will dare go against (the) rakyat’s opinion...especially after Sibu,” said Dzulkefly.

“What they are doing now is public consultation to get feedback. Based on that, they will make their decision,” he added.

Najib had said that it is the public who will ultimately decides if expensive government subsidies should be cut after Idris revealed government proposals to cut subsidies for fuel, electricity and food or risk bankruptcy in the next nine years.

Idris, the CEO of Performance Management and Delivery Unit (Pemandu), had said that 61 per cent out of nearly 200,000 Malaysians in the think tank’s SMS poll favoured subsidy reductions and supported the government implementing it within the next three to five years.

However, Pua disputed the validity of the results, pointing out that Pemandu’s poll question was a loaded one.

“That question is loaded –not properly contextualised,” he said.

“It is like asking the question should the government cut subsidies first or corruption first,” he added. “It is not reflective of what people are thinking.”

Pemandu’s poll text message had said that subsidising various consumer goods resulted in an annual expenditure of RM 74 billion. The poll then asked whether the respondent agrees subsidies reductions.

Areas which have been identified include fuel, food and infrastructure as well as tolls.

The Malaysian Insider

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