Press Statement by Lim Guan Eng in Petaling Jaya on Monday, 14^th April 2008: 

Adopting CAT – competence, accountability and transparency in good governance, especially in managing subsidies and our national resources 

The BN government should adopt a CAT system of good governance based on competence, accountability and transparency, particularly the thorny issue of managing subsidies and our national resources. Failure to do so could be financially disastrous for Malaysia with total subsidies in 2007 expected to mount to RM 43.4 billion, accounting for 35% of our 2007 Budget's operating expenditure of RM 123.9 billion.

Last year, fuel and gas subsidies cost more than RM 35 billion. According to the Information Department, rice subsidy has increased from RM800mil in 2006 to RM900mil last year. Subsidies for wheat flour and white bread cost the government RM364.8 million a year. Whilst the increased efficiency from reducing subsidies is widely acknowledged, the equity aspect and social protection provided by subsidies to assist the poor can also not be questioned.

Second Finance Minister Tan Sri Nor Mohamed Yakcop could be accused of being derelict in his Ministerial duties and failing to look after public interest if the BN government can come up with a scheme to ensure that government subsidies, especially fuel subsidies, benefit only the poor and not the rich or those who can afford them. The public has a right to ask that if there is such a scheme for subsidies benefiting the poor but not the rich, why did Tan Sri Nor not implement it earlier before the 2008 general elections when Tan Sri Nor was also the Second Finance Minister?

Tan Sri Nor had said in Penang yesterday that the BN government does not want to waste our subsidies on those who do not need them. Justice requires that subsidies benefit the poor and not the rich. Public interest also requires that subsidies must be managed efficiently and effectively to ensure that there are no leakages, waste and abuses.

Has Tan Sri Nor only realized now that subsidies also benefited the rich and are managed wastefully and inefficiently in Malaysia? It is easy for Tan Sri Nor to say that the country should move away from an economy with low-wage earners to a high-income, knowledge-based economy when we are still reliant on foreign workers.

That is why in Malaysia, there are low income families that spend half of their income on food unlike the United States, only about 16% of a family's income is spent on food. For this reason, high inflation would follow any removal of subsidies and impact most harshly on the poor.

What assurances are there that in reducing fuel subsidies the savings earned by the government will not be wasted on corruption? But will lead towards social projects that:-

1. Improves the efficiency and quality of the country's public transportation with an integrated plan combining sea, road, air and light rail network; and

2. Directly benefits the poor against the harsh effects of inflation.

These are important questions with oil prices reaching record levels of US$110 per barrel which would make the unsubsidised market price for petrol more than double the present RM 1.92 per liter. That is why any savings from any proposed reduction in fuel subsidies should be given directly to the poor in the form of cash transfers.

DAP suggests a two-prong approach of firstly a RM 35 billion economic stimulus plan of sharing oil profits of Petronas by giving each individual earning less than RM 3,000 monthly a RM 3,000 yearly bonus and each family earning less than RM 6,000 monthly a yearly oil bonus of RM 6,000/-. This economic stimulus plan would rejuvenate the local economy as most the money would be spent by the poor to buy their basic necessities. And secondly, adopting a CAT system that can protect public interest and prevent wastage by weeding out both the incompetent and corrupt as well as those that has lost the democratic spirit.

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* Lim Guan Eng, DAP Secretary-General, Chief Minister of Penang, MP for Bagan & SA for Air Puteh