Tuesday, June 3, 2008
Get ready to pay more
Let's brace ourselves for the inevitable. Newspaper editors have been invited to at least two briefings tomorrow on the new fuel subsidy scheme ahead of the Cabinet meeting. The Prime Minister is expected to announce the details of how the new subsidy scheme would work by noon. Hints have been given by Domestic Trade and Industry Minister Datuk Shahrir Samad but no details have been leaked. In short, it's very much a guessing game at this point. The signs are already there for us to see - the cost of subsidies could cause the country's deficit to shoot up to between 8% and 10% of its GDP. That would work out to about RM60bil, given that the current GDP is about RM650mil, according to visiting Prof Danny Quah of the London School of Economics recently. Fuel makes up 79% of the country's total subsidy spending in 2007 and with petrol prices rising across the globe, Quah, a Penangite, has warned that the tipping point has been reached, The Edge quoted him as saying. In short, if we don't do something about the subsidy scheme, we will pay a heavy price in the long run. We will not be able to pay for development projects such as schools and hospitals. For ordinary Malaysians, we can expect a higher cost of living. It's going to be more than just a pinch this time. As much as we understand the need to rise petrol and diesel prices, even from August, we like to see less wastage from the government. As much as appreciate the fact that Malaysians pay the least in the region for their fuel, we cannot deny that millions of ringgit have gone to waste on projects that makes little sense and sens. It will earn the government a lot of goodwill and understanding if we take a serious look at projects that burn taxpayers' money because they are overpriced or just not priority.