PUTRAJAYA: The second wave of subsidy rationalisation is expected to have minimal impact on inflation, says Performance Management and Delivery Unit (Pemandu) Chief Executive Officer Datuk Seri Idris Jala.
“(The) Impact is managable. We feel quite confident that inflation will be managed. We don’t want to see a situation similar to that in 2008 and 2009,” he told a special briefing on the second wave of subsidy rationalisation announced here yesterday.
Also present was Domestic Trade, Cooperative and Consumerism Minister Datuk Seri Ismail Sabri Yaakob.
The government yesterday announced a reduction in petrol, diesel, liquefied petroleum gas (LPG) and sugar subsidies, effective tomorrow, as a second step in its gradual subsidy rationalisation programme.
However, the government in keeping to its word in the gradual phasing out of subsidies in order not to burden the rakyat, continued to maintain subsidy prices on items like petrol, toll, sugar, flour and cooking oil.
The government pumped in about RM24.5 billion in subsidies last year or three per cent of Gross Domestic Product (GDP).
Subsidies for RON 95 petrol and diesel will be reduced by five sen a litre and LPG by 5 sen a kilogramme while sugar 20 sen per kilogramme.
“That (time) was a very high level. Anything below four (per cent) or five (per cent) is good. We are managing it because it only moves around three (per cent) ..less than three (per cent),” he said.
The latest Consumer Price Index (CPI), an indicator for inflation, between January and October increased 1.7 per cent to 113.8 compared with 111.9 recorded in the same period last year.
Jala said the subsidy rationalisation, this time around, would allow Malaysia to reduce government expenditure by about RM1.18 billion.
The first subsidy rationalisation had reduced government expenditure by more than RM750 million.
The savings would be channelled to six National Key Result Areas (NKRAs) of reducing crime, fighting corruption, improving student outcomes, raising living standards of low-income households, improving rural basic infrastructure and, improving urban public transport.
“We have reduced crime, since January, by 16 per cent and street crime by 38 per cent. We mobilised 14,222 police personnel into hot spot areas and have installed 496 close circuit televisions.”
“This year, we have put in place 20 sets of Light Rail Transit trains which can carry 2.4 million passengers.”
“We will commission a new bus terminal in Bandar Tasek Selatan, Cheras, January next year costing about RM600 million,” he said.
Jala said the minimal changes would help Malaysia achieve a position of fiscal responsibility and “put us on the path towards reducing our deficit”.
Asked on how much the deficit can be reduced, Jala said: “We are sticking to the Tenth Malaysia Plan.” — Bernama