What subsidy rationalisation?

The government decided to raise the price of petrol, diesel, sugar and LPG on midnight Last friday – never mind that the government called it subsidy reduction or subsidy rationalisation. The reason why sugar, petrol, LPG and diesel were chosen was erudited in the local print media this morning. As I understood it, the reason was the reduction exerts very little impact on the people but a huge impact on the government. The increase in sugar price (or the reduction in subsidy as the Government sees it would increase the price of teh tarik by 1.75 sen but the savings by the government can run up to over RM700m. One sen subsidy reduction in petrol would save the government as much as RM134m.
It was also repeatedly drummed into our heads that the current subsidy structure benefits the rich rather than the targeted poor. It is estimated that only 20% of the poor people benefited from the subsidy programmes all these years. More than two third of the subsidies are going to the middle and high income earners and foreigners. Manufacturers are using twice as much sugar as the households. Furthermore, the price of these commodities are the cheapest in the region giving rise to rampant smuggling.
All these facts and figures are fine and dandy. What irked me most is having recognised these weaknesses in the current subsidy scheme, why can’t we devise some sort of proper subsidy structure that will benefit its targeted users sans the leakges. Across the board increase in oil, diesel and LPG price would effect both rich and poor. Despite the government assurance that there would be no price increase, currently there is no law to stop the industries from increasing prices of their goods and services, if the inevitable price increase take place.In fact the poor would be more worse off since their purchasing power is less than the rich. After all these years we are still nowhere near finding a solution to ensure the subsidy really benefit its targeted group.
I would love to see the government utilise the saving from the subsidy reduction to improve the public transport system. The government need to assist the public transport providers. All over the world, efficient public transport were heavily subsidised by the government. Here is where subsidy would really benefit the poor and middle income people. These are the people who use the public transport and these are the people who needed most help. Additionally, an improved public transport would attract more users, thus would go a long way in meeting the NKRA in public transportation. Increase use of public transport would reduce pollution and improve the environment, much in tandem with the government green initiatives.
If you ever go to the spanking administrative centre of the federal Government – Putrajaya – more often than not you would meet those multi hued Nadi Putra buses. More often than not you would also see these 40 plus capacity buses forlornly carrying four or five passengers or worse still running sans passengers. And you would also see the road sides of the government offices in parcel C, D, and E were packed with cars sometime three layered deep. It is ironic isn’t it. Why aren’t the public using those buses to get to the offices, especially in Parcel E where the Ministry of Education, Higher Education, Health and Energy ministries are housed? Being a frequent visitor to the complex, I can tell you the answer. It is not the RM one ringgit fare, but the buses do not ferry the passengers to the place where they wanted to go. The buses would stop outside the complex and expect the passengers to walk inside. Come on man, we are not in Europe where the whether is temperate even in the summer months. Here the heat can be searing and the rain can be a real down pour that will soak you to the skin. Imagine carrying your documents for meetings plus your laptop from the bus stop to block E9, E14 or E10. Imagine that it is raining.Imagine pregnant ladies and old folks.Imagine mum and dad with little kids. I can tell you if the buses ply inside the complex with high frequency and regular intervals, more people would use the service. So, it still baffled me why the Putrajaya authority still has not seen the light, so to speak. I am sure many people have suggested all sorts of solutions. You do not ask the solution from the planners, they do not ride the buses. Ask the passengers! The Putrajaya Corp can advertise for all they can for people to use the Park and Ride and build more parking spaces, it would never be enough.

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