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Wednesday, June 4, 2008

Of Subsidies And Corruption

Of Subsidies And Corruption

Subsidies are on everyone’s minds these days. Even as the rakyat is faced with the bleak prospect of a more difficult future as the reduction of subsidies impacts on their lives, the government has to figure out how to go about unraveling subsidy frameworks that though attractive when introduced are now threatening not only the competitiveness of the nation but also its sustainability. There are risks – social, political, economic – that need to be confronted in an environment not necessarily conducive to objective and rational consideration of the very crucial issues involved.

Though complaining, and vehemently at that, is tempting, it will not get us very far. The fact that to a large extent the subsidy problems we face today are the result of poor economic management in the past does not help address the situation. Political consequences will follow, we have to deal with the issue. As in other countries, change is necessary. The question for us really is what changes should be made and how they are going to be managed.

We pay taxes in various forms, they are the principle source of revenue of the nation. It is mainly these funds that are used to pay for the operating costs of a given year. In the social democratic framework that we are supposed to have, some of this money is to be used to provide for basic needs such as healthcare, schooling and essential infrastructure such as a reliable police force, efficient and effective regulatory frameworks, electricity, clean water and roads. This is not just about building the hospitals and schools, it is also about maintaining them and ensuring that the services provided are a sufficiently high standard. The same goes for roads, water and so on.

This is how it is meant to be in theory. If implemented, many of the basic needs of an average household would be taken care of, without the need for additional expenditure. A significant amount of the monthly earnings of the average householder would be freed up, making it easier to face the prospect of increased prices from the reduction or even elimination of subsidies.

The reality is however very different. Those who can choose private schools and private hospitals, use toll roads, and employ private security guards or live in gated communities. Do not just take my word for it, ask the average Minister what his or her lifestyle choices are.

These choices are not necessarily prompted by elitism. It comes down to confidence, or the lack of it. The truth is that the public services are worryingly deficient, if not in levels of competence then in resources, to an extent that for many they are no longer a viable choice. This is especially true where children are concerned. Parents want to give their children the best, often at great personal sacrifice.

In some cases, there is no question of choice. The privatization of water, electricity and energy production and the steady increase in their pricing have had a domino effect that have left many having to manage increasing expenditure on shrinking earnings. Too slowly, Malaysians have woken up to the painful realization of how everything happening on the macro level around them has a direct bearing on their lives. The widening poverty gap is leaving us poorer by the day.

Which is why being able to depend on public services is so crucial. As we have however seen, that is not something we can do. What we are paying taxes for then?

It is indisputable that corruption has to a large extent pushed us into the corner we are. We are paying the hidden costs. Things are that much more expensive or that much more inefficient because somewhere, at our expense, someone is making a gain or someone who was not good enough is being given a contract. And the reality is that when someone makes a corrupt gain in the millions of ringgit, that is our money being handed over. That is our right to development that is being denied.

It is a sad truth that many of us will suffer the impact of a removal of subsidies, and suffer badly for it, because we have been robbed of the means to face these challenges by endemic corruption. We stand alone purely because the money we invested over the years to weave our safety nets has been stolen from us. There are not nets.

Managing change as such must involve increasing integrity, accountability and transparency. Corruption cannot be a part of the equation. Improving public service, regulating effectively and efficiently where it is needed and ensuring that things are priced based on their value rather than the private needs of a fat-cat official, will make it easier for Malaysians to deal with increased prices where those are really needed.

That is the least this government can do for us. It will save a staggering amount of money from cutting back on subsidies, money that can be deployed more effectively and equitably. Money that leaves no room for excuse.

(Malay Mail, 3rd June 2006)


Samuel Goh Kim Eng said...

When there's such a big fuel hike
It's time to change car for a bike
Or some may prefer their sporty spike
Although these choices are not what all like

(C)Samuel Goh Kim Eng - 040608
Wed. 4th June 2008.

Anonymous said...

Malik, could you please help a simpleton like me understand this.

Why can't our government offer us subsidies when they earn royalty from the O&G production? Royalty, which is growing with higher fuel prices i must add.

And furthermore, Petronas, a company built with the people's money, will definitely report higher revenues this year.

The Prime Minister is saying that the economy can still grow by 5%. But who benefits from this "economic" growth? The poor? The hungry?

Anonymous said...

truly agree what Ben said.

Anonymous said...

where is the RM 4 billion promised from last fuel hike?? 4,000,000,000!!

Pat said...

I read your last two paragraphs and I think: You'd think that no one needed to say that. But that's like a fairy tale coming true here. My mind cannot bend around the fact that that can come to be.

Anonymous said...

Come On People, Don't Complaint!
This is the government VOTED by you. If you regretted, PLEASE MAKE A CHANGE!

Anonymous said...

I think the poor and hungry one doesn't benefit from it. I am afraid that the crime rate will increase due to less subsidies for petrol(more people suffer). :(

Anonymous said...

The govt should nail shut the holes that is leaking before removing the oil subsidy. What's the point of removing the oil subsidy when the same amount money saved become more money going out as wastage. Give us a good, transparent and efficient governance first.

Mr. Smith said...

Let me give you few examples how our money goes down the drain or rather into cronies' pockets.

1. There is a standing order that all government departments and schools purchase their requirements from Finance Ministry approved dealers.
Now this guy I know , on receiving the Purchase Orders from the departments will go round to other stationery and computer shops to get his supplies and then deliver them to the departments at astronomically hiked up prices.
Believe me, he has no stocks of his own.
2. A crony contractor is given the task to do minor renovations and paint job in a school for RM 200,000. Believe me the job done was hardly RM 20,000. The headmaster of the school had no choice, being ordered from his superior, sign the 'work completed' form.
3. A municipal council spent millions of ringgit on landscaping, lighting , erecting sign boards, making arches, towers, flag poles and fountains. Crony contractors (connected to the municipal chiefs) are even paid hefty sums for trimming/chopping down trees! I heard the kick-back was enormous.
Meanwhile the upkeep of residential areas/housing estates are totally neglected.
And now they want to increase the assessment rates which was put on hold prior to the general elections.
4. This student who graduated with a cgpa of 2.0+ was given an immediate job by Petronas!
Need I go on?

Unknown said...

From an economic point of view, I agree that Malaysia should stop subsidizing fuel although as an individual now making less than 1500 it is painful.

I do heartily agree though that government need to improve before they can do this. Corruption is one part of that equation, but things that hit home harder are public services such as education (reducing prices), transport (fixing the horrible public transport system) and improving the generally living of the people (Clealiness etc).

I doubt the current government can stay long in power unless they can start addressing all these issues. Sadly, it seems the people in power are more interested in making the people they serve pay rather than admitting their mistakes and stopping dipping into our tax dollars. Plus now that 5 states are in 'enemy' terriority they seem to be out for blood.

John Tee said...

The government should engage independent auditor to check each and every GLCs account and send those corrupted hands into jail forever to show their will in the fight against graft.

I do not need your subsidies but please give me a clean and efficient system!

Starmandala said...

Are you feeling the ill effects of 50 years of BN mismanagement now? Bribery and kickbacks have long been regarded as routine when dealing with any government department. Even in small towns like Kuala Kubu Bharu, the Majlis Daerah has been known to make work for the sake of making money (for themselves, of course). Here are a couple of examples: two years ago they renovated the market at the approximate cost of RM200,000. Then last year the Majlis Daerah decides to demolish the newly renovated market and build a brand new one reportedly at a cost of RM300,000. Wonder who got the contract? Another example: every few years the district council embarks on a tree pruning exercise. I was told that each tree costs the taxpayer RM3,000 - and there are at least 100 old trees in the area. The contractor gets paid only RM600 per tree! Now you know why Malaysia is pokai! :-) Time to bury the BN, folks, such a deformed government does not deserve to exist.

CaptainCaveman said...

Very good piece Sir. Corruption and mis-management of the country.

If the Government can't even provide those basic things to the Rakyat, what do they expect from us? Keep on paying tax or be taxed on everything and live with a sub-standard living conditions?

No way!

Anonymous said...

They are knowing they can't be long in the government anymore, so, grab as much as possible before being removed off.

Anonymous said...

Budgets & Corruptions!
Ethics & Professions!
Rewards & Penalties
Responsibilities & Pensions!
Not because of Subsidies it comes with corruption
But every budget without proper procedures & auditing!

Why budgets are easily mingled with corruption or misappropriation because even professional auditing do not bother about the ethics they should hold!
Auditor are just taking order to report.

How many corruption get caught?
Financial controller of the Big Steel scandal even got reward as Dato!
Anyone got penalized?
Or rewarded because not telling lies?
Director of JPBD gone nowhere after she told a title was wrongly issued on piece of land for Town Park!
Dato xxx even publicly condemned her WRONG!

A staff hiding a file in Petaling Jaya Land Office got her Pension and everyone in the office refused to reply!
Is responsibility in line with Pension?
How many officers lost their pension even a lot of them just passing buckets?

If Ethics, responsibilities are not sticking with rewards or Pension or even with Penalties when they are malfunctioning, every day is just a bucket-passing day! The ground for corruption to grow and conducted in every Open Eyes!

So What!
Take them to court?
Another stink to talk?
Or, we just got a walking corps at work? Without spirit!

Anonymous said...

anon 10.30

all went to bail-out Port Klang Free Trade Zone, a scandalous project to rip off rakyat's money and all the promoters are from BN. Two of them Chor (from MCA) and Tiong are now promoted to be Deputy Minister and Deputy Chairman BBC respectively. The Ministers, Ling and Chan Kong Choy that approved the guarantees illegally have since retired. The UMNO treasurer, remains at the same position as of now.
Wanna know more? check it out with Capt Yusof of Ancient Mariner blog.

Anonymous said...


depending on your affiliation and networking, actually it pays to be corrupted. Need to know more about this. Check it out on the scandalous Port Klang Free Trade Zone-who are the perpetrators and who were elevated by BN.

Anonymous said...

Please la the money coming from the subsidy saved is going for a good cause okay! Save Sabah and Sarawak and also so that they will get their righful share of the petroleum profits.

I'e BN's cronies in Sabah and Sarawak can look towards a better future that the Malaysian Government will not collapse... so
its a matter of national security that the increase be implemented...anyone opposing to such move is anti malaysian and out to topple the malaysian government okay... kena masuk ISA wor bcos threat to national security...

Anonymous said...

I don't think that there is anything wrong subsidizing essential items meant to reduce the burden of the citizen: oil, electricity, health care etc. Hence, blaming on the previous administrators for giving subsidy is a very cheap strategy to avoid blame.

It appears that the price of oil in Malaysia is the most expensive compared to other oil producing countries.

Anonymous said...

So many comments & thoughts. Some are really good but most are really write without fact and non-sence. They just wrote because they don't like the government. So bias !! I think the most important now is to give constructive ideas and work together with government to go through this deficult situation.

Anonymous said...

Hunting the Dumb Orang Minyak/Moron

Consumer affairs minister, Shahrir Samad says there were no direct subsidy from Petronas???

What are these oil subsidies??? This is a hoax story to hoodwink the general public on the believe that there are the purported subsidies. There are no subsidies only a hoax to cheat the Malaysian masses. Every & All crude oil producing countries allocate a percentage of their production for domestic consumption and the balance for export to earn foreign exchange. What is this, Malaysian Petronas, the nett producer & nett exporter of crude oil, talking of the oil subsidies??? Look at Brunei & Saudi Arabia and the many more crude oil exporting countries do, both and all are nett producers & nett exporters of crude oil, there are no changes in the prices at their pumps for both petrol and diesel despite the whopping Crude Oil prices now reaching US$139/- per barrel, they are all enjoying boom and boost to their State Coffers with the greatest windfall of all times with record foreign reserves’ balances and also a boost to their economies, so why are we seeing the reverse in Malaysia??? There is obviously mismanagement of the funds from the power that be. Where are the windfall profits for Petronas gone to from the nett exports before or after being handed over to the Government??? A royal commission should be formed to investigate where have all the profits/funds earned from the exports had gone to???

Remove this deadly cancerous dumb orang minyak/moron, throw out that rotten tyranny!!!

It is the right time that this grossly rotten, corrupt and incompetent flip flop tyranny called big flop dumb orang minyak moron that remove the hoax fuel purported existed subsidies to hike petrol & diesel prices & increase the electricity tariffs should also be removed… & to accomplish this, all & whoever, MPs from both BN or Pakatan Rakyat, it is your call now and as all the people of Malaysia are firmly behind you to remove this dumb rot. Cannot imagine that a nett producer & nett exporter of Crude Oil has to do this, look at all the other crude oil nett exporters, there are no increases of prices of Petrol & Diesel at their pumps as both & all are nett producers and nett exporters of Crude Oil and they are now enjoying a boost to their state coffers & economies with a whopping windfall in oil prices of the current US$139/- per barrel that earned them huge foreign exchange reserves from their Crude Oil exports. But in Malaysia the reverse is true as there is no boost to the economy, but only sadness prevailed because the foreign exchange reserves from Crude Oil nett exports earned are poorly managed or badly mis-managed and no one knows where all the profits over the years had gone and we are saying a (large chunk of) the 700 or more Billions earned had disappeared and there is no accountability by the tyranny dumb orang minyak/moron power that be. Otherwise, we will be having a boom time, our state coffers will be flushing with cash/gold bars and a great boost to our economy and we should be celebrating and why that stupid dumb bloke orang minyak/moron is projecting gloom at this wonderful time. All the monies earned by Petronas must have been woefully squandered & cheated by this dumb orang minyak/moron or unless otherwise the Petronas'President & CEO Datuk Hassan Marican must have badly mis-managed the said windfall earnings by selling our Malaysian sweet crude forward at poor miserably low prices and buying low grade crude oil at a hefty high prices now for our local Malaysian consumption thus making losses instead of whopping windfall profits??? If this is the case all Malaysians including those unborn ones have been betrayed by this cancerous dumb Orang Minyak/Moron who has caused all these serious crimes, anarchies, chaos and inflations beyond comprehensions owing to the greed & mis-management by this cancerous corrupted power hungry dumb Moron/Orang Minyak who intended to stick to power beyond his welcome!!!