Subsidies Can Never Be Abolished Because It Is The Government’s Socio-Economic Responsibility To Reduce The Financial Burden On The Poor And Disadvantaged.

Press Statement
by Lim Guan Eng

(Petaling Jaya, Monday): DAP strongly opposes the call by Deputy Prime Minister Datuk Najib Tun Razak asking Malaysians to be prepared for the end of subsidies. DAP’s stand is that subsidies can be reduced gradually but never abolished because it is the government’s socio-economic responsibility to reduce the financial burden on the poor and disadvantaged. 

If subsidies meant for the poor are misused by certain irresponsible parties to enrich themselves, then it becomes a matter of failure of enforcement not a failure of the subsidies. To consider these two issues as one and the same is to confuse policy and enforcement.

Datuk Najib had said that the recent price increases in diesel is caused by the misuse of diesel subsidies by those not entitled to it. Such misuse has resulted in the government having to spend RM 16.6 billion this year if subsidies were maintained. This poses the question why no action was taken against the enforcement agency for failing to carry out their tasks.

It is the enforcement agencies’ failure that allowed smuggling of diesel to be sold for industrial use which is sold at the unsubsidized price of RM 1.70 per liter as compared to the subsidized price of RM 1.08 per liter. DAP regrets that the people have to pay for the failure and mistakes of these enforcement agencies in the form of higher fuel prices.

Subsidies affect economic efficiency and productivity but are necessary to provide social equity. That is why DAP urges the government to spread out the fuel price increases in a gradual and no the huge sudden increase last week. However, subsidies are still necessary, especially when the country, through Petronas huge profits, can still afford it.

Malaysian crude oil production rose to the highest levels of 762,318 barrels per day or a total of 18 million tonnes in 2004 with an export value of RM 21,318 million. Natural gas production also reached historic levels of 5,196 million standard cubic feet per day or a total of 20.8 million tonnes in 2004 with an export value of RM 17,079 million.

The recent fuel price increases will allow the government to save RM 2.2 billion. What is   RM 2.2 billion in subsidies compared to Petronas exports from both LNG and crude oil of RM 38,397 million in 2004. Or Petronas huge profits during the 2004 financial year of RM 26.3 billion. Whilst reducing dependency syndrome or subsidies can increase efficiency, the social and equity aspect of taking care of the poor can not be overlooked. 

The people’s unhappiness with the fuel price increases was clear during our nation-wide demonstrations yesterday when even Malay women and men came forward to participate and hold placards condemning the BN government for the fuel increase. Having a gradual fuel price increase over a year is less stressful in terms of economic impact but will also allow businesses time to revise their cost projections accordingly. Sudden fuel price increases reduces business certainty and affects investor confidence.

Malaysia Should Not Allow 100,000 Pakistani Workers So Long As There Are No Guarantees That There Will Be No Islamic Extremists Exposed To Terrorist Influence.

Prime Minister Datuk Seri Abdullah Ahmad Badawi’s advice to employers to stop relying on cheap foreign labour should be directed at Home Affairs Minister Datuk Azmi Khalid. Datuk Azmi has been one of the main proponents of bringing in 100,000 Pakistani workers to Malaysia.

DAP opposes this decision not only because of the language problem, but also there are no guarantees that amongst the 100,000 workers, there will be no Islamic extremists exposed to terrorist influence. Such a decision to bring in such a huge number of workers when there are no security guarantees is not only harmful towards our effort to continue Malaysia’s record as terrorist-free, but also may affect the internal security of our country.

We must not forget that Pakistan is in a dangerous spot zone with terrorist activity neighbouring Afghanistan. By employing Pakistani workers who may cause security problems, Datuk Azmi must realize the negative impact on Malaysia’s image internationally. There is no reason why Malaysia can not continue to take foreign labour from our neighbouring countries Who do not face any language problems such as Indonesia or even think of China. 

DAP also question whether Deputy Prime Minister Datuk Najib Tun Razak is joking when he said that foreign workers should be paid at the same level as local workers. Who would want to employ foreign workers if we have to them the same rate as that paid to foreign workers? Such statements are counter-productive and not in the interests of Malaysians as if would only give these foreign workers to demand higher pay.


*  Lim Guan Eng, DAP Secretary-General