Download - Subsidy_Rationalisation_Lab_Open_Day
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Dato Sri Idris JalaCEO of PEMANDUMinister in Prime Ministers Department
OpeningPresentation
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The purpose of Subsidy RationalisationLab Open Day :
To share lab findings &recommendations and seek
public feedback
To recommend a SubsidyRationalisation Roadmapto the government
Setting the stage ....
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PM has
introduced4 pillars to
achieve Vision 2020
1 Malaysia, People First, Performance Now Government Transformation Programme New Economic Model 10th Malaysia Plan
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People First
Performance Nowwas a first step
to unite our people
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2010 is a good year..
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We introducedthe GTP for
the rakyat
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The GTPisalready delivering
results in just3 months ....
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15.1% dropin overall
Index Crime
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39.6% drop in
street crime
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928,775
passenger
increase in
LRT ridership
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929 pre school
classes have startedand 7,616
primaryschoolshave been ranked
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Out of 44643,12753 areno longer
hardcore poor
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2665 government
contractshave been
published on line
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97 people convicted
of corruptionhave been published
in MACC websitewww.sprm.gov.my
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We havelaunched the
New Economic Model...
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Wholesale
& Retail
Oil, Gas &
Energy
Palm Oil
Health
Services
Financial
Serv &Capital Mkt
Greater
KL
Agri
culture
Tourism
Education
th
es
Electrical
& ElectronicsAgri
BizServices
Telco
...and
finalized12 NKEAs
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..to boost
our income(GNI per capita)
USD 7,000
USD15,000
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Malaysias
Competitive Indexhas improved
significantly..
18th
10th
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OurGDP growth
for first quarter
2010 is..
10%
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More investors are
investing in ourcountry...
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We have the
right ingredients
to succeed..
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However, the
future looks gloomy....
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Malaysia has a
rising debt...
362billionRM
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..and a rising deficit
47billion
RM2009
1998 5billionRM
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If government debt
continues at the rate of...
12%
20101997 2020
per annum
Government debt
RM billion
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...we could go
bankrupt in 2019
20101997 2020
1158billion debt
Government debtRM billion
RM
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We do not want to end up
like Greece ..
300billion debtEUR
SOURCE : Deputy finance minister of Greece , Filippos Sahinidis
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..or other similar countries.
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In order to save
our country...
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We must increase our
GDP..
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..AND reduce government
expenditure
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International &
local leaders realizedthe need to reduce our
subsidy bills...
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..and PakatanRakyat
share the
same views!
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Malaysians need
to be aware that we areone of the highest
subsidized nation...
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..even higher than
Indonesia & Philippines11.0
OECD
avg = 1.5%
PhilippinesChina 4India 3IndonesiaUnited
Kingdom
FranceSwit-
zerland
Malaysia2
4.7
4.6
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We spent recordsubsidy in 2009
74billion
RM
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Our subsidy bills in eachcategory is enormous
23.5billion
RM
4.8billionRM
3.4billionRM
42.4billion
RM
Social Fuel & Energy
Infrastructure Food
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This is equal to ....
12,900
RM
74
RM
billion subsidy Per household
=
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Somalians pay more
for fuel thanMalaysians
Averageretailfuelpricein200
81
USc
ents/litre
Somalia
157th
place
Singapore Thailand Malaysia
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As a result, we consume
more fuel thanother countries..Litres per capita
20071997
Singapore
ThailandIndonesia
Malaysia
India
China
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We will likely become a net
importer of petrol
by 2011
SOURCE: Petronas analysis
20151413121110092008
Thousand
barre
ls
Perday
2010 netimporter
status at 8%
pa growth Daily oil production8% p.a. growth
Daily local demand
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We have been giving
subsidiesto the wrong
income
group
Total
Others 0.4
Farmers &
Fishermen0.2
Poor 1.7
Companies
All consumers
Students
RM Billion in 2009
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Our sugar price is the
lowest in the region too!
Malaysia
Philippines
Singapore
Indonesia
Thailand
Price of sugarRM/kg, 2009
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And the lowest price for
flour too..
Vietnam
Singapore
Thailand
Indonesia
Malaysia
Philippines
Price of flour (RM/kg, 2009)
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We must live in thereal world..
We developed aframework for
subsidy rationalisation
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Principle 1Focus on the Big Ticket Itemsto achieve the big savings
(i.e Fuel, Gas / Electricity, Tolls)
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Principle 2Education is a human capitalinvestment and subsidy
should continue but we mustreduce wastage / abuse
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Principle 3Agriculture & Fisheriesare the mainstay of therural poor and
subsidies will continue
but must reducewastage / abuse
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Principle 4Healthcare isnecessary for a healthypopulation / workforce
and subsidy should
continue but mustreduce wastage / abuse
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Principle 5We should continue to
subsidize the poor anddisadvantaged and must target
our subsidies better
(eg: welfare assistance, lowcost housing)
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Principle 6Rakyat engagement andcommunications are critical
including engaging both sides
of the political divide
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Principle 7Subsidy rationalization must be
implemented on gradual / phasebasis, not big bang
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Principle 8Mitigation measures and
assistance are necessary to
cushion the monetary impact
(eg: stabilization fund and
subsistence allowance)
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Let me now take youthrough the subsidy
rationalisation roadmap &mitigation measures
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Fuel prices will
be increasedgradually..
Petrol 15 sen / litre
Diesel 10 sen / litreLPG + 10 %+ RM 0.17 to 0.40 /litre to streamline
supersubsidy to RM 1.60 / litre
Thereafter ; RM 0.10 / litre fuel every 6 months
and 20% LPG every year
Mitigation Plan
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We will provide
cash rebate..
126RM
Per person per car
(less than 1,000cc)54
RM
Per person per motorbike
(less than 250cc)
Mitigation Plan
Mitigation Plan
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This will cost the
government..
526RM
Million per annum
Mitigation Plan
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And the
government willsave....
44.9RM
billion in 5 years
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We arereviewing the
possibility of
introducing a
floating price
mechanism ....
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Electricity
tariff will beincreased..
Gas price (Power) by RM 4.65/ MMBTU
Gas price (Non Power) by RM 2.52/ MMBTU
Electricity tariff by RM 0.024/ kWhThereafter, increase Gas Price (Power & Non Power) by RM
3.00 / MMBTU and Electricity tarif RM 0.016 / kWh every 6
months
Mitigation Plan
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New tariff will not impact
56% of consumers
100-2000-100 OVER 400200-400
Distribution of usage (KWh/mth)
Percen
tage
ofhouseholds,
20
09
FreeNo
Change
g
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The government
will save....
35.9RM
billion in 5 years
Savings (RM millions) (Gas)
2010 2011 2012 2013 2014
1,121 4,524 7,502 10,396 12,346
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Toll rateswill be
increased
as per
ConcessionAgreement
Mitigation Plan
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Applicableonly for toll
highwayswhich have
alternative
routes...
g
Mitigation Plan
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And we willprovide
discount fortoll users..
20%Discount uponnext reload
(for more than
80 transactions per month)
Mitigation Plan
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This will cost the
government...
60RM
million per year
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In return, the
governmentwill save....
3.7RM
billion in 5 years
Savings (RM million) - Toll
2010 2011 2012 2013 2014
160.5 696 862 919 1,047
P i f fl d
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Price of sugar, flour andcooking oil will beincreased by
Sugar + 20 sen / kg
(every 6 months until 2012)
Flour + 20 sen /kg (2010)+ 25 sen / kg (2011)
Cooking oil (1 kg) +15% (2010)+15% (2011), thereafter 5% everyyear until Jan 2014
Y ill iMitigation Plan
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You will receive...
Year 1
Cash rebate of RM20 toMyKad/ MyKid card holdersthrough post-offices
Year 2
Discount through MyKasihcard (for income belowcertain threshold)
Use designated shops e.g.SaveMore, petrol stationsat high poverty areas
560RM
million per year 200RM
million per year
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W ill d
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We will reduce
wastages & inefficiencies
Agriculture
Usage of targetedfertilizers
Fisheries
Increase diesel priceIncrease incentives forfish caught (10 sen /kg) (50 sen/kg)
Maintain RM 200 monthlyallowance
Education
Remove subsidies for foreignstudents
Re-target subsidies for poorfamiliesHealth
Increase outpatient fees(RM 1 RM 3)
Poor will be continue to be
fully subsided
W ill d
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We will reduce
wastages & inefficiencies
Agriculture
Fisheries
Education
Health
16.3RM
billion over 5 years
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These savings are
intended to reduceour deficit and debt
RM
billion in 5 years103
2010 2015 Deficit
S
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4%(2011 2012)
3%(post 2013)
Studies by Bank Negara
shows inflation will rise to
2013 20152010
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We asked 2 simple
questions to the public...
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SMS 1
Malaysia spent RM 74 billion onsubsidies in 2009 causing a
fiscal deficit. Should subsidies
be reduced ?
Yes or No
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SMS 2
If Malaysia reduces its subsidies,should it be done
in 1 yearover 3 yearsover 5 years
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What do 191,592Malaysians think about
Subsidy Rationalisation?
SMS
Forms
Online
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115,703 Malaysianssaid YES to Subsidy
Rationalisation
61%
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124,750 Malaysiansresponded we should
reduce subsidies in3-5 years
66%
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We have to face therealities....
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..that this is the most
unpopular decisionthat the Governmenthas to make since
independence
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We have no choice but
to avoid ending uplike Greece
300billion debtEUR
SOURCE : Deputy finance minister of Greece , Filippos Sahinidis
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This bold step
will take uscloser to...
2020
Vision
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We may be angrytoday...
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...so we do not
expect peopleto be dancing
on the street
But the realities are
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But the realities are...
47billionRM
Rising debt Rising deficit
362billionRM
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And most
importantly...
We must do it forourfuture and
our future
generation
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Your feedback is
valuable to us..
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..for the future of
our country.
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Thank Youw w w . p e m a n d u . g o v . m y