Written by Stan Lee, PoliticsNow Malaysia
KUALA LUMPUR (politicsnowmy.blogspot.com) - It looks like Prime Minister Anwar Ibrahim's government is pushing on with its austerity drive with another subsidy removal, this time on egg prices, likely to be announced soon - triggering concerns that a longstanding subsidy on petrol prices might also be axed.
The news is likely to anger Malaysians who have been unhappy with the shock jump in costs of living after government subsidies on fuel, electricity tariffs, rice and chicks were cut.
Already there is renewed suspicion that the Anwar regime is also looking to remove the subsidy of RON95, the grade of petrol most commonly used by Malaysian drivers.
"The impact from the proposed removal of egg subsidy won't be much but RON95 will be a big bomb," Tian Chua, the former MP for Batu, told PoliticsNow Malaysia.
Like many analysts, Tian agreed that the Anwar administration needed to pursue an austerity drive but one that will not create or add to already busting-at-the-seams price pressures.
"I don't agree with the government's cost-cutting drive in cutting healthcare, civil servants' pension and IJN benefits. However the current subsidies system needs to go. Egg subsidies only benefit a few big farmers. It's the cause of supply shortages and removing the subsidy can increase production to ensure stable supply. In general, it won't cause price hikes," said Tian.
"But RON95 if it comes will be serious. Each of the subsidy schemes needs to be examined carefully."
RON95 BOMBSHELL AT BUDGET 2025?
Indeed, there is widespread expectation that Anwar, who is also Finance Minister, will remove the subsidies on RON95 petrol when he unveils the Budget for 2025 on October 18.
While the external conditions are mixed with the intensifying conflict in the Middle East a real deterrent as it is causing wild spikes in global crude oil prices that the government should protect its citizenry against, Anwar is nevertheless expected to lean on the stunning strengthening of the ringgit over the past few months to ram through the RON95 subsidy removal.
If successful, his administration will trim billions of ringgit in fat from the government's vastly over-bloated spending bill.
But the question remains - can the Malaysian people support another round of hikes in costs of living. Unlike eggs, the knock-on effect from any removal of the RON95 petrol subsidy will be massive and widespread.
In June, the government had announced the abolition of subsidies for diesel, causing the price at fuel stations nationwide to rise to RM3.35 per litre. The still-subsidised RON95 costs RM2.05 per litre compared to the unsubsidized and higher grade RON97 which currently costs RM3.19 per litre.
WILL SUBSIDY SAVINGS BE SPENT WISELY?
Meanwhile, Agriculture and Food Security Minister Mohamad Sabu has announced the government is reviewing the subsidy for chicken eggs grades A, B and C so as to save RM100 mil a month. The saving could be redirected to develop other critical aspects in agro-food sectors, the minister argued.
"The problem is we don't see Anwar focusing on agriculture production or on activities that boost the agro-food sectors," an analyst, who requested not to be named, told PoliticsNow Malaysia.
"Malaysia still imports 60 to 70% of its food. We have companies that take the government's subsidies but then go and import food. Thus it is very important for Anwar to channel more resources to food production and don't waste the subsidies on cronies or prolong a monopolistic patronage system that, to be fair, is actually a legacy from the past governments especially from the Umno-BN era."
If the green light is given, the proposed egg subsidy removal is likely to be announced also during the Budget 2025 presentation.
According to Mat Sabu, the country has spent more than RM3bil since February 2022 in subsidies for chicken and chicken eggs.
The subsidy for chicken was terminated on Nov 1 last year, following which, the supply and price of chicken became more stable, according to the minister.
"When we took the unpopular decision of ending the chicken subsidy, many people belittled our efforts, saying that the price of chicken would soar.
"Alhamdulillah, after the subsidy was terminated, the price of chicken no longer soared, and more importantly, the country benefited by saving RM100mil a month," said Mat Sabu.
Written by Stan Lee, PoliticsNow Malaysia
https://politicsnowmy.blogspot.com/
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