KUALA LUMPUR (Malaysia) - MALAYSIA may begin cutting fuel and
other subsidies under a proposed five-year plan that could save the
government 103 billion ringgit (S$43.5 billion) and help avoid a
debt crisis, a Cabinet minister said on Thursday.
Idris Jala, a minister in the Prime Minister's Department, said
Malaysia's subsidy bill was unsustainable at a whopping 74 billion
ringgit last year, or 12,900 ringgit (S$5451) per household. This
comprised 15 per cent of the 2009 national budget, which pushed the
deficit to a 20-year high of seven per cent of gross domestic
product.
At a roadshow to gauge public opinion on the proposed subsidy
cuts, Jala warned that Malaysia's debt of 362 billion ringgit , or
54 per cent of the economy, could nearly double to 100 percent by
2019 if the cuts are not carried out.
'We don't want to end up like Greece,' he said. 'We desperately
need an exit strategy for subsidies as they are unsustainable ...
otherwise, we have a time bomb on our hands.'
The subsidies have resulted in Malaysia having the lowest food
prices in the region, and its fuel prices are among the cheapest in
the world.
Under the proposal drawn up by a government think-tank headed by
Jala, the government will gradually cut subsidies for fuel, gas,
electricity and highway toll rates but keep its spending on
education, agriculture and fisheries, and health care to help the
poor. Fuel and infrastructure account for about 38 per cent of
total subsidy bill. The plan has not been approved by Prime
Minister Najib Razak's government, which fears a voters' backlash
ahead of general elections due in 2013.
-- AP