Pakatan: What are fuel subsidy savings used for?

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KUALA LUMPUR: Pakatan lawmakers asked Putrajaya to explain what had happened to the savings from oil subsidy cuts following the government’s claim that the money it saved could be used to build 40 universities. Rafizi Ramli (Pandan-PKR) and Wong Chen (Kelana Jaya-PKR) said the people wanted to know how many hospitals had been built or upgrades to public transport and other amenities undertaken by the government since it embarked on its subsidy rationalisation exercise last year.

“Where are the hospitals, schools, universities, new buses that the Barisan Nasional government has built from the savings of RM6.1 billion in the form of subsidy cuts last year?” Wong Chen asked at a press conference at the Parliament lobby.

On Tuesday, Deputy Finance Minister Datuk Ahmad Maslan defended the recent subsidy cut that raised the price of RON95 petrol and diesel by 20 sen per litre each, saying that Putrajaya could build 40 new universities with the amount it spent on the subsidies.

He said the fuel subsidies were “stupid” if they benefited everyone across the board and that the RM2 billion spent monthly by the government on the subsidies could be put to better use.

“With RM24 billion spent annually on fuel subsidies, the money could be used to build more than 40 new universities in Malaysia,” Ahmad said.

He said the RM2 billion spent monthly on fuel subsidies could build “2,000 fully air-conditioned community halls around Malaysia”.  Ahmad  pointed out that even with the subsidy cut, Malaysia’s prices of fuel and diesel are still cheaper than in Singapore and Thailand, where a litre of RON95 is RM3 and RM5, respectively. RON95 fuel in Malaysia currently retails for RM2.30 per litre compared with RM2.10 before the subsidy cut.

Wong and Rafizi slammed the deputy minister, telling him not to insult the rakyat by creating a perception that the people are to blamed for the national debt. They said Putrajaya would have saved RM4.7 billion after slashing the fuel subsidy by 20 sen in September 2013 until the end of September this year, and another RM1.4 billion from October to December this year after the most recent subsidy cut.

“The RM24 billion mentioned by Ahmad Maslan was not all used for petrol and diesel subsidies as he had claimed. It is only RM13.7 billion. The rest of [the total] amount is used for cooking gas (RM5 billion) and RM5 billion for the Bantuan Rakyat 1Malaysia (BR1M),” Wong said.

They also noted that the amount Putrajaya had to pay to service its debts is higher than the amount spent on subsidies. “If we compare the RM13.7 billion with the RM24.4 billion Putrajaya is expected to use next year to pay the interest on the loans it has taken, the subsidies that Ahmad Maslan keeps mentioning are not even half of the interest that the people are paying because Barisan Nasional continues to be in debt.” — The Malaysian Insider

This article first appeared in The Edge Financial Daily, on October 16, 2014.