Malaysians say they deserve subsidies, sceptical rationalisation will meet objectives

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PETALING JAYA (Nov 6): The majority of Malaysians say they deserve fuel and electricity subsidies and are sceptical the  subsidy restructuring programme will meet its intended socioeconomic objectives, a survey by the Association of Water and Energy Research Malaysia (AWER) has shown.

According to AWER’s National Energy Security Survey (NESS), 72.45% of respondents do not support the government’s move to reduce and restructure subsidies for fuel and electricity with only 27.55% of respondents feeling otherwise.

Penang recorded the highest percentage in disagreeing with the move at 82.57%, followed by Selangor (81.25%) and Kuala Lumpur (80.26%).

The main reasons given by respondents were that it was their right as Malaysian citizens to receive subsidies (27.53%), to reduce daily expenses (26.32%) and it was the government’s duty to reduce cost of living (18.5%).

The highest number of supporters for the government’s subsidy rationalisation programme was recorded in Putrajaya (46.38%), followed by Pahang (31.91%), Negeri Sembilan (31.25%) and Sarawak (31.25%).

The main reasons given for their support were that the subsidies should be given to the needy (18.13%) while another 6.95% felt it would result in better economic distribution.  

While a majority of Malaysians feel they deserve fuel and electricity subsidies, they are also distrustful that the Malaysian government will fulfill its responsibilities in ensuring the restructuring of subsidies will meet its intended socioeconomic purpose.

More than half of those surveyed (57.48%) were not confident the government would provide the subsidies to the needy.

Penang recorded the highest rate of non-confidence (68.09%), followed by Kuala Lumpur (66.78%) and Kelantan (66.45%). Conversely, Putrajaya recorded highest percentage in confidence at 82.89%, followed by Perlis (47.37%) and Sarawak (46.71%).

A total of 67% were also not confident the government would correctly channel savings from the restructuring of the fuel and electricity subsidies, without wastage, towards projects creating amenities for the people.

A high proportion (68.38%) said they wanted to know exact details on how the savings from subsidy removal would be spent by government, as opposed to 31.62% of respondents.

For those wanting transparency over the spending of savings from subsidy rationalization, Kuala Lumpur recorded the highest response (79.93%) followed by Johor (76.64%) and Selangor (75.99%).

Pahang recorded highest response (47.37%) in not wanting to know the detailed expenditure of the savings, followed by Perlis (46.38%) and Kedah (43.42%).

The survey was aggregated based on responses from 4,864 people, using a sampling method developed by the Malaysian Statistics Department for the 2010 National Population and Housing Census.

AWER President S. Piarapakaran said the survey showed that transparency was key in building the people’s confidence that the restructuring of subsidies would be positive for them. Given so, the government should publish details on how the savings are finally used.

“Subsidy removal (or subsidy rationalisation) is often seen as an unpopular move. When this move is coupled with lousy excuses, it is harder for Malaysians to understand subsidy removal in totality,” he said in a statement.

He said for example, the steep increase in electricity tariff beginning Jan 1 this year was mainly due to the implementation of a two-tier natural gas pricing but the effects of the policy did not augur well with industries and society.

“The failure to address actual cost of natural gas and tagging natural gas price at a premium price does not go well with industries,” he said.

“While government agencies repeatedly issued statements that the subsidy removal process has minimal impact in increasing prices of goods and services, the reality at the grassroots is a world of a difference.

“In recent weeks, we have also been hearing ridiculous reasons on subsidy cuts for fuel (diesel and RON 95 Petrol).

“Is the fuel cost that we are paying reflects real fuel cost or is it a formula price (a marked-up pricing)? Fundamental issue like this must be addressed holistically so that members of public and businesses can understand the subsidy removal implementation fully,” he added.  

Second Finance Minister, Datuk Seri Ahmad Husni Hanadzlah had repotedly said on Oct 27 that fuel subsidy rationalisation scheme to be implemented next year will be divided into three tiers depending on the monthly income.

The first tier, with individual salary below RM5,000, would be eligible for 100 per cent subsidy, while tier two for those with low- to middle-incomes will get a partial subsidy and the tier three or those earning above RM10,000 will not be eligible for the subsidy.

The government had said the subsidy cuts were needed to trim the nation’s deficit to gross development product (GDP) ratio further to 3.5% this year and 3% next year.