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Wednesday, October 8, 2014

Subsidy rationalisation is not a panacea

The results of a survey conducted through a micro website, #Bajet2015, showed that the top three most concerned issues were the increasing cost of living, employment and house prices.

The micro website meant to collect public views on the 2015 Budget listed 16 columns covering problems of all areas for discussion, view sharing and recommendations, and allowed the public to vote online from August 1 to September 30 the issues they are most concerned about.

The survey results showed that in addition to the above mentioned three issues, the people are also concerned about education, social welfare, public law and order, corruption, Goods and Services Tax (GST), healthcare, environment and agriculture, and lastly transportation and infrastructure. The results reflected that the people are most concerned about issues closely related to their daily lives. The GST to be implemented next year has not yet received great concerns, perhaps because it has not yet been officially implemented and the impacts have not been felt.

But the increasing cost of living is inevitably related to the GST. To put it more bluntly, the public must be psychologically prepared for another era of increasing prices and cost of living.

In addition to the increasing imported goods prices, the factors causing rising prices and cost of living also include the implementation of GST, as well as the price adjustments for fuel and electricity. It is a price that the people must pay under the government's subsidy rationalisation policy.

Based on the current situation, prices are expected to keep rising and it is an inevitable trend. However, the increase rate requires further observation. What the government can and should do now is to find out how to work together with the civil society and try its very best to seek measures to reduce unreasonable price hikes, while minimising the increase rate, if not to prevent price hikes, to mitigate its impact on the people, particularly middle and lower income earners.

We understand the government's intention of implementing subsidy rationalisation for a sound financial system, but we must also point it out that "subsidy rationalisation" is not a panacea to solve the government's financial problems. For the masses, they might think that the disadvantages of the policy have first been felt before its advantages are seen, as the consequences it brings include inflation and worsening prices hikes, making the pressure on the people who have been facing increasing cost of living heavier. It has not only worsened the burden, but also deepened their dissatisfaction and grievances. It is a social problem that the government must seriously address and try to resolve in the future.

In fact, subsidy rationalisation is not the only way to improve national economy. There are instead many other viable ways, such as reducing corruption in government departments, implementing "cost rationalising", "management modernisation", "efficiency enhancement" in various government departments and agencies, while attracting more foreign investment to create more employment opportunities and establish an environment of fair competition. These are the corresponding requirements, as well as ardent expectations of the people who can no longer enjoy full subsidy.

Opinion translated by Soong Phui Jee
Sin Chew Daily

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