KUALA LUMPUR – Former finance minister II Datuk Seri Johari Abdul Ghani has urged the government to expedite the implementation of targeted subsidies under the 12th Malaysia Plan Mid-Term Review (12MP MTR) to bolster the country’s fiscal position.
The Titiwangsa MP said if bulk subsidies can be reduced and then stopped, it will not only help the government in terms of public savings but also prevent leakages in terms of embezzlement and smuggling.
In addition, implementing targeted subsidies would enable the government to achieve its target of lowering the fiscal deficit to 3.5% by 2025, compared to 5.6% last year.
“I believe that no matter how big the authority is, it will not be able to prevent subsidy leakages from continuing in the future if the difference between the subsidised prices and the actual prices in the market is large,” he said when debating the 12MP MTR motion in the Dewan Rakyat today.
Last year, the government spent a total of RM77.3 billion on subsidies for petrol, diesel, liquefied petroleum gas, packet cooking oil, electricity, chicken, eggs, and others.
The government expects a total of RM64 billion to be spent on subsidies this year.
In his Budget 2023 speech, Prime Minister Datuk Seri Anwar Ibrahim said the country recorded a loss of RM10 billion due to embezzlement and smuggling of subsidised goods.
Johari also called for political stability in the country so that the government could implement the 12MP MTR policies, including targeted subsidies, without delaying them any longer.
“With the strength of the government (currently), I believe we will have to get through this short-term pain for the long-term gain,” he said.
In the meantime, Johari explained that the projected fiscal deficit contraction of 3.5% by 2025 is expected to inject confidence in foreign investors to invest in Malaysia, thereby boosting demand for the ringgit.
He said a better fiscal position indirectly shows the government’s ability to govern the country and also the ability to pay back debt interest.
Besides the fiscal deficit, the ringgit transition is also influenced by several other economic factors, namely political stability, good economic management, sustainable gross domestic product growth, overnight policy rate management, credit rating, and capital inflow and outflow, he said.
“What we need to do in the next five to 10 years is ensure that the country’s economic foundation continues to be strong, even though MPs have different opinions, as it will affect the country’s current and future generations.
“In theory, it is true that the ringgit depreciation can help boost the country’s exports by making export costs lower, but we need to be aware that Malaysia’s position in the global supply chain also requires us to import intermediate goods.
“The ringgit depreciation will cause intermediate import costs to rise and make the country’s export goods uncompetitive,” he added. – September 12, 2023
