Look to subsidy reforms instead of more BR1M, says MCA man

BY OPALYN MOKOCTOBER 1, 2013

GEORGE TOWN, Oct 1 — The government should focus on subsidy reforms, curb inefficiencies and corruption and strengthen its finances instead of dishing out more cash aid schemes that may not be sustainable in the long run, MCA’s Datuk Chua Tee Yong said today.

The Labis MP expressed alarm over the government’s suggestion of another round of nationwide cash handouts for households drawing monthly incomes of between RM4,000 and RM5,000, and pointed to Malaysia’s budget deficit and high debt levels.

“It is important that the government’s proposal does not result in further rating downgrade and subsequently, depreciation of Ringgit and imported inflation,” he said in a statement.

The country’s budget deficit and debt is reaching its debt ceiling and analysts have warned that the upcoming Budget 2014 is “very crucial” in addressing the fiscal position of Malaysia to prevent further sovereign downgrades by rating agencies.

But Chua, who heads MCA’s young professionals bureau, also said the recent proposal announced for the continuation of the 1 Malaysia People’s Aid (BR1M) by Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah had came at the right time as 66 per cent of Malaysian households stood to gain from the scheme, if Parliament approves it in the Budget 2014.

Ahmad Husni had announced the government’s plans to give out the cash aid twice a year from 2014.

He also said the government is looking to implement the best assistance models for households with income between RM4,000 and RM5,000.

When the Najib administration introduced BR1M in 2012, cash aid was handed to households that drew incomes below RM3,000 per month.

Chua also wants the government to further revamp the fuel subsidy in the upcoming budget, to be announced end of this month, to target those that require assistance.

“Deputy Finance Minister Datuk Ahmad Maslan recently disclosed that only 30 per cent of those who bought RON95 petrol were from households earning less than RM3,000 per month which meant a large portion of the petrol subsidy had benefited those with higher incomes,” he said.

The government needs to encourage direct or targeted assistance in this case to reduce leakage, he added.

On the proposed Goods and Services Tax (GST) to be included in Budget 2014, Chua reiterated his stand that the rate must be below 5 per cent.

“Any rate above five per cent would be detrimental to the economy and burden the people,” he said.

He called on Putrajaya to instigate a clear plan to educate and provide more information to the public, especially those who would be largely affected by the implementation.

“Studies on GST undertaken by the government should also be made public to assure the people that its implementation would not have detrimental effects on society as a whole,” he added.

He then urged Putrajaya to provide information on the measures and costs savings it will undertake to the public in order to improve the finances of the country.

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