Current Issues: Subsidy is it GOOD or BAD?

Before we start, lets define what is subsidy. I got this from wikipedia.

subsidy - In economics, a subsidy (also known as a subvention) is a form of financial assistance paid to a business or economic sector. A subsidy can be used to support businesses that might otherwise fail, or to encourage activities that would otherwise not take place.

Subsidies can be regarded as a form of protectionism or trade barrier by making domestic goods and services artificially competitive against imports. Subsidies may distort markets, and can impose large economic costs.[1]

Financial assistance in the form of a subsidy may come from one's government, but the term subsidy may also refer to assistance granted by others, such as individuals or non-governmental institutions, although these would be more commonly described as charity.

Is subsidy good or bad? That is a subjective question.
BUT if we view good in economic terms as increasing productive benefit for the nation, increasing wealth and availability of goods and services now and in the future, then there are some form of subsidies that fall under this GOOD category.
I have cut and pasted this article below. Then we would notice that the forms of subsidies before 1980's are the ones that falls under GOOD category. But thing started going downhill from there.
Coming back to the petrol price hike issue, I am of the view that subsidizing petrol and diesel is BAD for the nation. A fast way of depleting our nation's resources.

this article from www.malaysia-today

A Critical Review of Price Control & Subsidies in Malaysia

Written by Dr. R.Thillainathan

(A Note prepared for delivery at LSE Alumni’s Forum on Rise & Fall of Subsidies on 26.5.08)

The Forum is on the subject of the Rise & Fall of Subsidies. Under DrM the extent and size of subsidies widened and expanded. The framework he created for the control of prices of petroleum products was a time bomb. I am sorry it did not explode in his face. Instead it exploded in the face of his chosen successor PM DB. In the process it led to subsidizing consumption on a colossal scale and on an indiscriminate and inequitable basis. More areas of investment were also subsidized. Such investment subsidies is being further expanded under DB.

Production & consumption subsidies – nature, extent & implications

Historically, the economic and financial management of Malaysia has been generally prudent. Reliance on subsidies and price control was limited and very selective. But DrM was more radical with his price control experiment. An experiment that has turned out to be a nightmare for Malaysia and his successor. It distorts resource allocation, makes for inequity and threatens to undermine the country’s sacred legacy of fiscal prudence.

Before DrM subsidies were aimed at production and investment and not at consumption. A more serious problem with subsidies then – it was implicit and opaque and not explicit or transparent. Therefore it was less amenable to public scrutiny. And it made it more difficult to question the government on its subsidy program.

Investment activities that were subsidized heavily but implicitly were as follows:

- double cropping of padi (with irrigation provided free of charge);

- land development and resettlement (with the administration cost of the scheme not recovered from the settlers);

- provision of education (where fees charged were small relative to cost and more so for higher education) and

- key areas of manufacturing and tourism (where profits earned were exempted from tax).

As the padi farmers and settlers were amongst the poorest in the country, the subsidies extended to them were not wholly inequitable. University graduates and businessmen (in non-traditional areas) singled out for subsidies were less deserving no doubt. But in the first few decades of independence it may have been justifiable to subsidize graduates and businessmen given the high rate of unemployment and the critical importance of knowledge workers for development.

DrM greatly widened fiscal incentives (to cover agriculture and IT services) and expanded the size of implicit subsidies (by exempting profits earned over a longer period).

Dato Seri DB has also aggravated inequities. Firstly by widening the class of exempt investors. It now covers even those engaged in real estate development. And secondly by withdrawing the tax-exempt status of equity investments of workers with the EPF and of retail investors with PNB and the likes (by replacing the imputed system of taxation of dividends with a single tier system of taxation).

Let us now look at explicit subsidies. Its coverage and size was always limited until DrM’s time bomb exploded in DB’s face. The handouts under the school food & nutrition program are the only items of consumption that were subsidized and strictly in a limited way. Production inputs subsidized were fertilizers as well as (to an extent) credit in padi farming and textbooks for schooling. The payment of a guaranteed price to local padi farmers has been, until recently, more in the nature of a production and not a consumption subsidy. (See footnote 1 in the attached Annex Schedule). Now with a run-up in the world price of rice and a near unchanged guaranteed price, the padi farmers are likely to be the real losers and the licensed traders/importers the big winners.

DrM’s consumption subsidy time bomb took the form of the approved price mechanism (APM). He erected this back in 1982 for petroleum products. The mechanism maintained the price payable by the consumer to the government’s fixed (or controlled) price. To ensure that the producer received the market price, it adjusted the tax payable by the oil companies or the subsidy payable to them.

DrM was the lucky PM. During his long over-stay as PM, to maintain the fuel price (paid by consumers), only the tax rate had to be adjusted and little or no subsidy was payable.

DB was not so lucky. Since he became PM oil price has escalated, (partly thanks to the easy money policy of the US).

In 2008, assuming an oil price of USD100-120 pb, the fuel subsidy is estimated at RM18 billion and the tax forgone at RM7b. Therefore the total consumption subsidy to motor vehicle owners, the well-off in Malaysia, is a colossal RM25b.

In 2006, when oil price averaged USD70 pb, the total subsidy paid was RM10 billion. Of this RM7.6b was captured by motor vehicle owners and operators. This excludes the tax revenue forgone of RM7.3b.

In 2002, during DrM’s last full year in office, when oil price averaged USD25.50 pb, the total subsidy paid was only RM3.7b (of which fuel subsidy was probably RM2b).

DrM’s rotten legacy (with respect to price control and the resulting consumption subsidy) was not confined only to controlling the price payable by the consumers (to an arbitrary price it had fixed).

It also extended to a second type of price control – one aimed at regulating profit of utilities with monopoly power. A utility was permitted to increase its price provided the return on its capital was below the prescribed threshold return. However, under the Mahathir Administration, the maintenance of price of a utility (at an unchanged level), was accepted as an end in itself.

This applied not only to the utilities such as water, electricity and telecommunications but also to gas.

Petronas, which is the producer and distributor of gas in Malaysia, is required to sell it at a controlled price to the electricity generators at a price well below its international price. The Mahathir Administration had decided to control the price of gas because it was also controlling the price of electricity. This has led to cross-subsidization of not only electricity generators but also electricity users. It interferes with the smooth operation of the market mechanism and distorts resource allocation. To the extent that the subsidy is an off-budget financing arrangement it is more opaque and makes meaningful analysis of such arrangements more difficult

For an oil price of USD100-120 pb, the implicit subsidy from the control of gas price is estimated at RM20b.

It is staggering to note that now the consumption subsidy, and just for fuel, will far outstrip the development expenditure of the public sector. The fuel subsidy in 2008 is estimated at RM45b versus the projected total development expenditure of RM40b. Interestingly the RM200b 9MP development expenditure target was itself a record. The size had worried many economists on its likely inflationary or crowding out effects.


Fuel price control & subsidy – an inspired insight or a monumental folly

I am surprised that some had viewed DrM’s design of the APM as an inspired insight. It was in fact a monumental folly. Stabilizing the fuel price through an adjustment in duty (which offered in any case only a limited cushion) or through a subsidy payable, leads to the squandering of a scarce resource. And as this is a depleting resource the government failed to take into account the real risk of a continued rise or a sudden jump in price (as has certainly been the case from 2004). And once the public gets used to a fixed price, the government will find it very costly (except in a crisis) to raise the price, and hence remove the subsidy especially in a democracy, (again as is amply evident in Malaysia).

The massive subsidy for fuel (almost the only consumer good subsidized in the country) is enjoyed by motor vehicle owners and operators, the better off segment of society. There is no case for the granting of this subsidy. No such subsidy is being granted to non-vehicle owners and operators, the worse off segment of society. Only some users of public transport may deserve the subsidy but there are less indiscriminate and inequitable ways of addressing their needs.

The removal of the fuel subsidy will no doubt greatly increase the cost of owning and operating motor vehicles and force the less well off amongst them to use public transport. As the coverage and frequency of public transport services is not satisfactory this will greatly inconvenience this group. Therefore the removal of the subsidy has to be accompanied by a corresponding improvement in public transport, (both bus as well as mass transit rail transport including an effective system of feeder buses to support mass rail transport). And given the very bad state of traffic congestion encountered by road users in getting to their work place and back, priority should also be given to the introduction of urban congestion charge on road users. There is a strong case for the revenue collected from this charge to be spent on cross-subsidizing public transport. Of course the imposition of the congestion charge will immediately reduce the number of motor vehicles getting into the city. Public bus transport can be stepped up concurrently (which is not very difficult) to cope with the increased demand (with mini buses re-introduced to service commuters in the suburbs)

The removal of the subsidy will also impose a painful readjustment on energy-intensive industries or force them to become more fuel efficient. But this is something to be welcomed in the interest of building a more competitive and resilient economy.


An aside on DrM’s zero inflation target & price control

In passing it is also instructive to refer to a third type of price control - reliance on which was greatly increased by DrM as a means to achieve his so-called zero inflation target[1]. This form of price control was aimed at price maintenance as an end in itself, and applied to industries dealing in so-called essential goods such as sugar, cement, steel, motor vehicles and even chicken. To make price control more palatable to the businessmen, the authorities protected their profits by strictly regulating competitive imports or entry into these industries, and by allowing the businessmen to seek a price review based on changes in their cost of operations. This type of price control activity with import or entry restriction can expose the regulator to capture by the regulated.[2] It can enable the businessmen to charge a higher price or short-change on quality thereby undermining the welfare of consumers or the competitive position of other businessmen who are end users of the controlled products.[3] Where the authorities have been slow in allowing price adjustments in the face of major shifts in supply or demand conditions, such price control activities have led to shortages and black marketeering. This has been found to be the case from time to time in the cement and steel industries.

Where the Government control activity has taken the form of a severe restriction on imports regulated through the issue of import permits with a nominal regulation of prices, as is the case with the import of motor vehicles, this has led to abnormal profits in such distributive trades and intense competition amongst rent-seekers to capture such profits.[4] Rent-seekers are always on the lookout for opportunities to create contrived scarcities to earn monopoly rents. To eliminate such incentives and opportunities, the Government has to make a firm commitment to competition in all its economic pursuits.


Badawi Administration’s limited attempt at curbing growth in consumption subsidies

The Badawi Administration, after the general elections of March 2004, started raising the prices of petroleum products. But it halted this process from 2007, partly on account of some public disquiet and more in order not to prejudice its prospects in the subsequent general elections which it called in March 2008. Now that the elections are over it has no choice but to raise the fuel price and eliminate the unprecedented and massive subsidisation of consumption if the country’s legacy of fiscal prudence is to be restored.

In 2004, the total Government revenue was around RM100b. But only RM8.8b was generated from taxes on motor vehicles. However, petroleum products were enjoying a subsidy that year of RM4.2b. Less the subsidy net taxes on motor vehicles was only RM4.2b. In 2008 motor vehicle owners are likely to end up enjoying a subsidy on a net basis of around RM10b.

There is no case for motor vehicle owners, certainly a very well-off group, to enjoy such subsidies. There is also a strong case for the Government to subject the consumption of petroleum products to sales tax. The level of the sales tax on petroleum products in Malaysia is a lot lower than most countries, including those in the Region. At the current level of oil prices, the duty has to be waived. In fact the Government has to provide a substantial subsidy, in addition, to keep prices at the current level. Even if Malaysian consumers pay prices which reflect market prices and which includes the full Malaysian duty, the prices paid by Malaysian consumers will still be lower than overseas prices. Therefore, in the interest of fiscal prudence as well as equity the Government should let prices rise to the desired level, at least on a phased basis.

Collecting taxes on motor vehicles through a duty on petroleum products is also more efficient as the duty payable will be related to usage. Therefore, it will create the right incentive for users to be less wasteful and to economise on their use when prices are higher.

Road tax as well as import and excise duties on motor vehicles are a less efficient form of tax.[5] They cannot be justified as a wealth or luxury tax as other forms of wealth or luxury consumption are not subject to such taxes. If the purpose is to regulate the car population, it is best to require a certificate of entitlement (COE) to own a car (as in Singapore) or to operate the car (as can be done for use of a car in Kuala Lumpur’s Central Business District or CBD.) The certificates can then be auctioned off amongst the higher bidders. The Government is now better placed to make this policy shift with the sizeable investment it has made on mass transit rail transport. The additional investment required to improve this form of public transport will be a lot less than that required on flyovers and elevated highways. The massive investments for an improved road network in any case can alleviate traffic congestion only on a temporary basis.

The Government continues to build more flyovers and elevated highways in the Klang Valley instead of improving the inter-face between the different mass rail systems, extending their coverage, reintroducing a mini bus feeder system within each suburb and by ensuring a more effective enforcement of traffic rules. One wonders if the DB administration’s continued reliance on the system of negotiated tenders – another rotten legacy of the DrM administration – (and in spite of the DB Administration’s declared intention to rely on it only on an exceptional basis when it came to power in October 2003), has distorted incentives of the decision makers.

Where improvements in public transport (including better bus services) are combined with a Road Pricing System for entry into KL’s CBD, the use of revenue generated from COEs and the Road Pricing System to cross-subsidise public transport can be easily justified as users of public transport do not impose any external costs on other road users.

The improvements will greatly reduce the multi-billion RM losses the economy is presently suffering from the time lost in commuting within the Klang valley and from the enormous stress traffic congestion imposes on commuters.


Conclusions

Price control and price subsidy has been on the rise in Malaysia from DrM’s early years as PM. There is no sign of its fall under the DB administration.

Price control is inefficient for attaining economic or welfare goals for several reasons. Firstly, it distorts resource allocation. Secondly, it dispenses with the services of the price mechanism which provides a costless way of coordinating economic activities which are by their very nature extremely complex and involved. Thirdly, beneficiaries cannot be targeted and thus ends up benefiting those who do not deserve any assistance. Often those who deserve the assistance are only a small minority and there are other more efficient and less inequitable ways (such as income transfers) of reaching out to them. Fourthly, price control encourages illegal and immoral activities including bribery, corruption, smuggling as well as illicit manufacture.

The size of consumption subsidy, (and almost entirely due to the control of fuel price), has gone almost completely out of control. Ineptitude, opportunism or lack of grit is now threatening the integrity of the government’s finances as well as the very fabric of the economy.

The production subsidies accorded to businessmen through a system of fiscal incentives (or tax breaks) have been increasing from the early years of the Mahathir administration. Many corporations including MNCs have thus not paid taxes for many, many years running. More importantly, under the current full employment environment, investments generated by fiscal incentives create no additional jobs and in fact reduces tax revenue. Why is this so? With full employment, the new investment displaces an existing investment which is currently paying taxes. And hence the country ends up collecting less tax revenue.

The alternative to a system of fiscal incentives is to rely on a lower tax regime to promote investment. A lower tax regime can make for more investment, higher profits and hence more taxes. This happened in Malaysia in spite of the big reduction in tax rates during the mid and late 80s. If there are no tax breaks, there will be more corporate taxpayers. The resulting gains on tax revenue from the removal of fiscal incentives will far outweigh any likely losses in tax revenue from the reduction in the tax rate. These reforms will also make for less distortion in resource allocation.


R. Thillainathan

25.5.08



Appendix: Relationship between total subsidies1 paid and oil price, 1999-2007

Year




Subsidies




(RM billion) Oil price (USD pb)



1999 1.14 18.56


2000 4.82 29.89


2001 4.55 24.92


2002 3.68 25.48


2003 2.68 30.35


2004 5.80 41.20


2005 13.39 58.47


2006 10.11 69.60


2007 12.15 74.00


Source: MOF Treasury Economic Reports for relevant years.


Notes:

1.As per 2002/03 TER goods accorded subsidies were as follows: diesel & LPG, rice, fertilisers, textbooks as well as items given under the food & nutrition program for school children. With respect to rice, the government controlled the price payable to padi farmers. Those licensed to buy the poorer quality rice from the local farmers are also licensed to import the higher quality rice from abroad such as Thailand. The higher the guaranteed price for local rice, the more likely is the buyer/importer to make a loss from engaging in the rice trade business. So where the government fixes a high guaranteed price it has to subsidise the rice trader to cover his losses and make a normal return for engaging in the business.

2.As is clear form the data DrM’s administration did raise the fixed price in response to the increase in oil price from 2001. Fortunately for him the extent of the rise in price was small relative to the rise in oil price in the mid-2000s. There is no doubt that he would also not have raised the fixed price from 2007 on account of electoral considerations. This is readily evident in his decision not to introduce the VAT/GST in spite of its widespread adoption the world over. In designing the APM he should have realized that once set up it becomes an excellent tool in the hands of any populist politician to maintain himself in power and he is probably no exception.

3.In 2006 as per the TER fuel subsidy accounted for 76% of the total subsidy paid.

4.These are best estimates and not actual.


[1] DrM’s infamous experiment with price control (through the restructuring in 1994 of the Department of Domestic Trade into the Ministry of Consumer Affairs) was aimed at achieving his target of zero inflation. In this context he had opined that the pursuit of inflation targeting by economists via the control of money supply and interest rate was simplistic and easy.

[2] This type of price control was dealt with at length in R. Thillainathan, Malaysia’s Experiment with Zero Inflation and Price Control – An Assessment, Malaysian Institute of Economic Research, 1995 (See MIER Monograph Series No. 4).

[3] In the steel industry, end users who wish to import steel products on account of their more stringent quality requirements, have to convince a panel made up of domestic steel manufacturers and regulators as to why they should be given a permit to import the products. The domestic car makers have also faced this requirement but as they are in a promoted industry, one promoted by the previous Administration, their challenge was a less onerous one.

[4] From January 2004 until 2007, the Ministry of Domestic Trade & Consumer Affairs started the practice of licensing jobbers to supply diesel and Mogas to independent distributors in the rural areas who are not a franchisee of an oil company. As the price of diesel was controlled well below its market price for many classes of consumers, this opened up possibilities for smuggling diesel to foreign countries or reselling it to consumers who are not eligible for such a subsidy. This licensing requirement therefore opened up a new rent-seeking opportunity in classic text book terms.

[5] High road tax has led to evasion. And bribery of enforcement officers by the evaders is not uncommon.



Dr. R. Thillainathan is past president of the Malaysian Economic Association. He obtained his 1st degree from the University of Malaya and Masters and PhD at the London School of Economics.

Thats my Letter in Malaysiakini

Wrote this quite some time ago, just after Dato Seri Najib talk about petrol and subsidy. Only today this appear in Malaysiakini.

Actually, I am not the only one suggesting financial subsidy for the low income Malaysian. Lim Guan Eng in his letter in Malaysia-today also write the same thing.

No I havent calculate how much total financial subsidy, but I guess it wont be as much as RM40billion.

dengan ehsan Raja Petra's Malaysia-today.

Give us an equal share of Petronas profits
Posted by Raja Petra
Saturday, 12 January 2008
As BN Will Definitely Increase Prices After Elections With Subsidies Of RM 40 Billion Annually Completely Unsustainable, Malaysians Must Demand A Full Commitment From BN To An Equal Share In Petronas Profits.

The Star estimated on 10.1.2008 that the Malaysian government will spend RM 40 billion on subsidies annually between 2007-8, with RM 35 billion in fuel subsidies and RM 5 billion in other subsidies such as cooking oil, flour, education, housing and agriculture. This huge amount of subsidies is unsustainable and the only reason that fuel, cooking oil and flour prices have not risen is to allow BN to win votes in the coming general elections.

As BN will definitely increase prices after winning the general elections, Malaysians must press for a full commitment from BN in the coming general elections to demand an equal share in the Petronas profits to reduce Malaysians’ financial burden. BN claims that inflation rate for 2007 is only 2% when the true picture on the ground in more than 20%. When prices are increased, especially fuel, true inflation rate on the ground may go up to more than 40%.

DAP expresses concern that Prime Minister Datuk Seri Abdullah Ahmad Badawi has still not woken up to the challenges of negative impact of high oil prices that has reached US$100 per barrel, the NEP and Malaysia’s declining oil reserves that will turn Malaysia from an oil exporter to a net oil importer in 2011, will damage future economic growth and prosperity. The triple shock of high oil prices, the anti-competition, anti-growth and anti-trade NEP as well as Malaysia’s declining oil reserves are huge challenges that the BN government has not even begun to address.

This oil revenue has allowed Malaysia to cushion the negative impact from mismanagement, wastage of public funds and corruption scandals that have plagued Malaysian society and would otherwise have crippled Malaysia’s economy. When Malaysia becomes a net importer or oil by 2011, one wonders where Malaysia is going to find the tens of billions of ringgit needed to fill in the gap in the nation’s finances.

Oil contributed RM 53,311 million or 37.6% of the 2007 government’s revenue of RM 141,790 million. In other words more than three quarters of oil revenue are used to fund the RM 40 billion subsidies, which is not sustainable and if continued would lead the country to bankruptcy. Despite Petronas earning RM 500 billion since it was established in 1974, Malaysians have not benefited from a single cent in sharing in the oil revenues. This contrasts with an oil importer like Singapore that can afford to distribute S$ 2,000-2,500 a year to poor and unfortunate families.

US financial giant, Morgan Stanley had estimated in 2004 that over the last two decades corruption cost Malaysia US$100 billion (RM 380 billion). With Petronas earning more than RM 500 billion since it was established in 1974, one can imagine how much was stolen and that only RM 120 billon or 24% of the RM 500 billion in Petronas profits were channeled to the people with the remaining 76% or RM 380 billion stolen by corrupt officials.

In other words for every RM4 spent on development projects, the value of work done is only RM1 with the remaining RM3 lost to corruption, waste, inefficiencies and leakages. The actual loss may be higher as the scandal of repairing Chinese primary schools in Muar showed that RM 30,000 was spent when the value of work done was only RM 3,000/-.

The time has come for. Malaysians to demand a general election commitment from BN to give an equal share in Petronas’ profits. Those earning less than RM 3,000 per month be given an annual cash grant of RM 3,000 and families with a combined income of RM 6,000 per month be given RM6,000 annually. Such a scheme would cost slightly more than RM 30 billion annually, less than the RM 40 billion subsidies spent. Better the oil money be spent on the people than be wasted by corruption or white elephant projects that are not productive except to the contractors.

LIM GUAN ENG

Petrol Subsidy Debate.

Lets make my stand clear in this issue;
I do not support commodity price subsidy. Full stop.

Pointless for me to explain that aa scheme like this, subsidy on the price of an essential item, be it rice, sugar, water or petrol and diesel would only skew up the consumption behaviour of consumers. Consumers tends to consume more of the subsidized item, which had been made relatively cheaper that other alternatives. This would make alternative products uneconomical, unable to compete on price.

True that petrol and diesel is the basic necessity for downstream products. Anything that require transport from producer to consumer is more than likely has petrol component in its final price offered to consumers.
So the theory goes that by subsidizing petrol and diesel, other goods and services would not increase in price. How true.
BUT that stance doesnt encourage consumers, ie Malaysian people to search for alternatives. By alternatives I do not mean just biodiesel.

What if we change the way we do things? Do we have to commute everyday to office, factories and drive our car to supermarket to buy food? Do we have to drive our kids to school every morning? What if we collectively find other ways to reduce petrol consumption?
Still, price is the BIG determinant that will push us to change our way of doing things.

As they said, that the poor villagers on bicycle do not use as much petrol subsidy as a city dweller in Taman Tun who has 4 cars in the porch.

Let us consider this scenario:
Tomorrow Govt removes the subsidy on petrol and diesel. So prices rose to the world market price about RM2.60 a liter for petrol. So a raft of other products and services would also increase in price, food prices, bus fare and transportation cost.

People would change their way of doing things. And firms would also change their way of doing business. I would expect people would make less shopping trips, and reduce their commuting. Firms would do more of their business online, and their office workers would do most of their work online from home, reducing the need to commute to office.

In my opinion, we have to move on and accept the fact that oil price will stay high for a forseeable future. Lets accommodate that into our planning for the country. The sooner we accept that the better.

Now Dato Seri Najib, what are you going to do with the billions of extra oil revenue? Surely you cant just use it to buy another Scorpene or two? Now its time that Dato Seri Najib to explain further that the Govt will subsidize the poor Malaysians below certain level of income an amount of money to relieve them of their burden of high prices brought about by removal of petrol subsidy.
Dato Seri Najib, do announce that the Govt will give RM200 a month to lower income Malaysian household, on per household basis provided that their combined income is less than RM1500 a month.


Sikap pemimpin BN termasuk Najib akan 'bankrupkan' negara - Mahfuz
Wan Nordin Wan Yaacob
Mon | Dec 31, 07 | 1:33:17 pm MYT
SEREMBAN, 31 Dis (Hrkh) - Ketua Penerangan PAS, Mahfuz Omar menyelar kenyataan Timbalan Perdana Menteri, Dato' Seri Mohd Njaib Tun Razak yang menyatakan bahawa pembangkang 'tiada akal' dalam menawarkan penurunan harga minytak kepada rakyat jika memerintah Malaysia.



"Kerana kita ada akal lah kita menawarkan kepada rakyat penurunan harga minyak pada harga yang berpatutan.Kita tidak mahu rakyat nanti bankrup kerana kenaikan harga minyak.Kita juga tidak mahu angkara pemimpin yang menyeleweng, negara dan rakyat yang akhirnya menjadi bankrup," ujarnya kepada Harakahdaily hari ini.

Mahfuz berkata, kenyataan Najib bahawa negara akan bankrup jika penurunan harga minyak dibuat hanya membayangkan bahawa pemimpin itu 'hilang akal'.

"Negara tidak akan bankrup jika menurunkan harga minyak, sebaliknya pengurusan negara yang tidak beretika, tidak cekap, penyelewengan berleluasa, rasuah di kalangan pemimpin kerajaan akan menyebabkan negara menuju kepada kebankrupan," katanya semasa dihubungi Harakahdaily hari ini.

Terdahulu semalam Najib semasa merasmikan program di Sabah menyatakan bahawa kerajaan akan bankrup jika harga minyak diturunkan dan kerajaan tidak akan boleh membina sekolah, universiti dan pembangunan jika tindakan itu dilakukan.

Pendidikan percuma, pembangunan terancang

Mahfuz yang mengulas lanjut kenyataan itu berkata, Najib tidak bijak dalam membuat kenyataan sedemikian kerana baginya sumber negara masih banyak dan negara tidak akan menuju ke arah bankrup jika menurunkan harga minyak.

Malah katanya keuntungan dari hasil minyak sebenarnya boleh dimanfaatkan untuk sektor pendidikan (pendidikan percuma) dan pembangunan yang lebih terancang, katanya.

Bagaimanapun perkara ini tidak diamalkan oleh pemimpin kerajaan hari ini, sebaliknya mereka bermewah-mewahan dalam berbelanja selain mendapat ganjaran melampau hasil dari pengurusan negara ke arah 'kantung sendiri', katanya.

Sebagi bukti Kata Mahfuz, rekod dalam Laporan Audit negara 2006 menunjukkan bahawa penyelewengan dalam beberapa urusan pembelian dan kontrak bekalan peralatan kerajaan seperti pembelian helikopter, 'screwdriver' dan beberapa peralatan lain pada harga yang tidak munasabah adalah bukti betapa pengurusan kerajaan Barisna Nasional (BN) sangat lemah.

Jawab isu komisen

'Trend' pengurusan negara sebegini katanya hanya akan membuatkan kewangan negara menjadi tenat kerana terpaksa menanggung perbelanjaan yang 'luar biasa' yang akhirnya tidak memberi manfaat kepada rakyat ataupun pembagunan negara.

Mengulas dakwaan penglibatan Najib dalam mendapat komisen pembelian kapal selam dan pesawat bernilai masing-masing RM400 ke RM500 juta Mahfuz menyatakan bahawa sikap seperti Najib inilah punca yang membawa negara kepada bankrup.

Pemimpin seperti najib sebenarnya tidak layak menerajui kerajaan ini kerana ianya hanya akan menjadikan pengurusan negara semakin lemah dan mereka hanya memikirkan soal kepentingan 'periuk nasi' mereka sahaja, katanya.

Sambil melahirkan rasa kesal dengan kenyataan Najib yang dianggap sebagai memperbodoh rakyat itu Mahfuz berkata, pembangkang sebenarnya mahu menawarkan penyelesaian kepada masalah yang dihadapi rakyat akibat kenaikan harga minyak.

Oleh kerana tertekan dengan tawaran pembangkang ini, Najib akhirnya membuat kenyataan yang tidak menunjukkan jiwa glokalnya sebaliknya menjadikan Timbalan Presiden Umno itu bahan tertawa, kata Mahfuz.

Tolak idea Najib

Justeru Mahfuz menyarakan kepada rakyat agar menukar kerajaan yang ada hari ini kepada kerajaan pimpinan Barisan Alternatif (BA) yang jika diberi mandat akan membela nasib rakyat.

"Kita berfikir bukan untuk menyusahkan rakyat sebaliknya menolong dan membela rakyat.Tidak seperti yang pemimpin BN dakwa bahawa kita ini pengacau dan tiada akal," tegasnya.

Mahfuz menyeru rakyat agar menolak idea pemimpin seperti Najaib ini yang tidak mementingkan rakyat, justeru ia perlu direalisasikan dalam pilihan raya akan datang.

Anwar buat tawaran

Beberapa hari lalu, dalam progam bersama rakyat di Negeri Sembilan, bekas Timbalan Perdana Menteri, Dato' Seri Anwar Ibrahim dalam ceramahnya di Linggi mengumumkan tawaran penurunan harga minyak jika BA diberi mandat memerintah Malaysia.

Anwar yang berceramah di hadapan lebih 800 hadirin menerima tepukan gemurun sebaik sahaja mengumumkan perkara itu dan berjanji keuntungan Petronas yang kini mencecah RM80 billion akan diagihkan untuk pendidikan percuma dan penurunan harga minyak.

"Saya ada pengalaman dalam mengurustadbir negara sebab saya bekas Timbalan Perdana Menteri.Masa saya jadi Menteri Kewangan dahulu pertumbuhan ekonomi negara mencapai lebih 9 peratus, tetapi kini sekitar 5 peratus sahaja.Ini menunjukkan pengurusan ekonomi negara yang tidak cekap selain rasuah yang meningkat," ujarnya.

Dalam ceramah yang sama, Anwar juga mencabar Najib untuk menafikan pembabitan Timbalan Presiden Umno itu dalam skandal komisen pembelian kapal selam dan pesawat Sukhoi yang didakwa membabitkan nilai komisen antara RM400 ke 500 juta.

Sehingga kini Anwar berkata dakwaan itu tidak dijawab Najib malah pemimpin negara itu hari ini mendakwa pembangkang membuat tuduhan melulu.

"Saya kata saya ada bukti, saya tidak akan buat tuduhan tanpa bukti," ujarnya.

Justeru beliau menyarankan agar rakyat melakukan perubahan dalam pilihan raya akan datang bagi memastikan kerajaan yang 'korup' hari ini disingkirkan.




Najib: Opposition would bankrupt the country over fuel subsidy

By MUGUNTAN VANAR

KOTA KINABALU: The opposition’s promises to reduce oil prices if it were to form a government will only bankrupt the country, Datuk Seri Najib Tun Razak said.

The Deputy Prime Minister said it was “just not possible” for the opposition to bring fuel prices down, pointing out that they were only fooling the people with empty promises.

He said claims that the opposition would channel Petronas profits into subsidising fuel prices did not make sense as current oil prices were on a record high.

“Say, if Petronas makes RM70bil or RM80bil (and) they want to channel it for fuel subsidy. Then where will the government obtain funds for building roads, hospitals and other amenities?” Najib said at the Tuaran Tamu Besar and Cultural Carnival here yesterday.

He said that despite escalating world fuel prices, the Barisan Nasional government was able to maintain the lowest prices compared to most countries in the region.

“We can sustain our oil production until 2011 if no new oilfields are found.

“After that, from being an exporter, we will become an importer of oil,” he said, adding that Malaysia’s current oil production was not as large as countries in the Middle East.

Najib also questioned an opposition claim in Tuaran that a Kadazandusun university student had dropped out because of financial problems.

“I want to ask them to show us this student. I will ensure that she gets a full scholarship to continue her studies,” he said.

Tuaran, a rustic town at the foot of Mount Kinabalu, has lately become a hive of opposition political activity after the appointment of local lawyer Ansari Abdullah as Parti Keadilan Rakyat (PKR) state liaison chief.

Chief Minister Datuk Musa Aman, in his speech, slammed PKR adviser Datuk Seri Anwar Ibrahim for promising the people that he would increase the 5% oil royalty for the state.

“He never talked about oil royalty issues when he was Finance Minister,” Musa said, adding that Sabah had been well compensated with over RM20bil in Federal development projects.

Najib also said the Federal Government had approved the building of a new RM120mil hospital for Tuaran.

He also announced that a RM13mil water treatment plant and upgrading project in Telibong would be ready in April next year.