Malaysia is one of the most subsidised nations in the world. Its total subsidy of RM74 billion in 2009 is equivalent to RM12,900 per household or 4.6 per cent of GDP even higher than Indonesia (2.7 per cent) & Philippines (0.2 per cent).
Due to high subsidies, Malaysia’s fiscal deficit stood at 7% of GDP or RM42 billion in 2009. Malaysia will be bankrupt by 2019 as total debt would soar to a RM1.16 trillion if we do not cut subsidies now.
Below are the breakdown of 2009 subsidies,
- RM 30.8 billion – Primary, secondary, higher education and scholarships.
- RM 22.9 billion – Medical services, petrol, toll, foodstuff (paddy, sugar, cooking oil)
- RM 18.0 billion – Gas subsidy for power and non-power sector, prefential interest rate.
- RM 2.3 billion – Welfare aid for poor, farmers, fisherman and disable.
Prime Minister’s Department’s Performance Management and Delivery Unit (Pemandu) was giving the task to come out with the plan to rationalise the country’s subsidy scheme.
A nationwide SMS survey conducted by Pemandu found 61% of respondents agreeing to the subsidy rationalisation initiative, with the majority preferring for it to be phased out over three to five years.
Below are some of the recommendations on subsidies that are to be removed.