Subsidy removal: Malaysia needs ‘reality check’ – Activist

Shah Alam - A community activist has emphasised the need for Malaysia and its people to undergo a 'reality check' in light of the controversial possibility of subsidy elimination.

In the complex landscape of Malaysia's economic challenges, the government is poised to implement controversial subsidy eliminations amid concerns of a deteriorating economy.

This move comes against a backdrop of rising dissatisfaction among Malaysians, who questioned why they should bear the brunt of government mismanagement during these difficult times. As the cost of living escalates and economic stability remains elusive for many, tensions are running high, highlighting the urgent need for nuanced solutions that address both economic realities and public concerns.

In an interview with the Sinar Daily, Liyana Marzuki, a community activist shed light on her recent podcast session with the "Jangan Pajak Otak" to provide accurate information to the public on issues related to public interest. Recently, there was news from Bloomberg about the potential elimination of subsidies in Malaysia, possibly in June 2024. Recognising the importance of obtaining authoritative insights, Nurhisyam Hussein, the economic advisor to PMX was invited to shed light on this matter. Nurhisyam revealed that:

• The potential increase in fuel prices; from the current RM 2.05 per litre to RM 3.50, representing a substantial RM 1.45 increase. The jump raises concerns, particularly considering the impact of subsidy removal in neighbouring countries like Indonesia where riots occurred in 2016;
• To address these concerns, the government plans to implement subsidy rationalisation progressively over time, possibly with incremental increases every six months to mitigate the immediate impact on the public; and
• The approach aims to reassure the public and prevent any adverse reactions by ensuring a clear understanding of the government's strategy.

According to Liyana, she had been discussing the removal of subsidies since last 2023 and her perspective on this matter was influenced by the country's staggering debt, which was now nearly 65 per cent of Gross Domestic Product (GDP), amounting to approximately RM 1.7 trillion, the highest in Malaysia's history. When considering on this matter, she always reflects the future generation and reflects the experience of Sri Lanka and Venezuela. Venezuela was once a wealthy nation with abundant oil reserves, faced economic collapse due to prolonged subsidy maintenance and a 'cash is king' mentality since the 90s. Learning from such examples, she believes that addressing the subsidy issue is timely and critical.

Lyana further stated that:

• The previous attempts by the Barisan Nasional (BN) government were clouded by corruption issues like 1Malaysia Development Berhad (1MDB), which undermined public trust in subsidy removal efforts. The current government as far as she is concerned has not shown any signs of integrity issues and the timing is right for subsidy rationalisation;
• She did not anticipate receiving the subsidy if it was removed, given that she and many others fall within the M40 middle-class category. It is likely that cash transfers, if implemented, would target the B40 and below, covering 60 per cent of the population. However, it is crucial to grasp the economic reality facing Malaysia after 65 years of independence as we are no longer economically prosperous; and
• She stressed that Malaysia was burdened with significant debts and subsidy liablities with an uncertain economy. Comparing Malaysia to neighbouring countries currently has one of the lowest fuel prices after Brunei. In Indonesia where salaries are lower than ours, fuel prices are higher. 

Liyana emphasised that we must acknowledge that times have changed, and we cannot expect the past to mirror the present. To convey this reality to the public, especially those who may not benefit from subsidies, we need a 'reality check'.

It is essential to recognise this reality and not selfishly cling to subsidies, as failing to address our economic challenges could jeopardise the future for our children and grandchildren, as seen in countries like Venezuela and Sri Lanka.       

The article titled Subsidy removal: Malaysia needs 'reality check' - Activist was written by Wan Ahmad Atarmizi and published in the Sinar Harian Daily on 14 May 2024. The podcast in Malay may be accessed in Youtube, "Penarikan Subsidi Minyak: Rasional dan Impak", Jangan Pajak Otak.