A news item in The Sun reported that the Democratic Action Party (DAP) supports the abolishment of fuel subsidies only if the profits of Petronas are shared equally among all Malaysians earning below RM3,000 a month. While, this is a good idea, however, I feel that RM3,000 is way too low, especially for Klang Valley folks. Given the higher cost of living in the Klang Valley, especially in Kuala Lumpur and Petaling Jaya, I suggest that the fuel subsidies is to be shared equally among all Malaysians earning below RM5,000 a month, or at least to people working and living within the Klang Valley area.
The following is the news item:
Ng Kee Seng
The SunPETALING JAYA (Oct 19, 2007): The DAP supports the abolishment of fuel subsidies only if Petronas’ profits are distributed and shared equally with every working Malaysian earning below RM3,000 a month.
DAP secretary-general Lim Guan Eng said today whilst it may be economically unrealistic to expect any government to perpetually subsidise petroleum and gas without limit, it is socially unrealistic to expect the poor to survive without any assistance once the subsidies are removed.
He said Domestic Trade and Consumer Affairs Minister Datuk Shafie Apdal had given the clearest indication of a rise in fuel prices next year when he said the government might not be able to continue giving fuel subsidies following the rise in record fuel prices to more than US$88 per barrel this week.
“What is economically justifiable can not be socially justifiable if the poor are not given any financial assistance to counter inflationary impact from removal of gas subsidies,” he added.
However, the government can only abolish the annual RM 27 billion fuel and gas subsidies to allow market pricing by distributing the RM 27 billion savings to the poor and Malaysians earning below RM3,000 per month.
The government would have to pay RM14 billion in subsidies with Petronas paying an extra RM13 billion as gas subsidies. For financial year ended March 31, 2007, Petronas’ gas subsidy totalled RM15.6 billion, up 9.1% from RM14.3 billion in 2006. The RM15.6 billion was given to TNB (RM5 billion), IPPs (RM6.7 billion) and non-power sector comprising small-industries, residential. and commercial users (RM3.9 billion).
Lim asked: “Is it in the national interest that IPPs benefit RM6.7 billion in gas subsidies in 2007 and earn huge profits without returning any benefit to Malaysians? Petronas’ cumulative subsidy since 1997 amount to RM58.2 billion, of which RM48.8 billion was to the power sector and RM9.4 billion to the non-power sector.
“Subsidies are part of socio-economic measures meant to help the poor. Something is very wrong when subsidies are offered to huge companies to further pad their extra-ordinary profits.
“In view of the high costs from smuggling and loss of efficiency from fuel subsidies, DAP would only support the abolition of subsidies if the savings from the RM27 billion spent on subsidies last year is shared with working Malaysians earning below RM 3,000 per month.
“This would enable every working Malaysian and senior Malaysian who is above 60 years of age, whose income is below RM 3,000 a month, to get at least RM3,000 a year to deal with the expected rise in inflation following the removal of subsidies.
“Better the RM27 billion in savings from subsidies be shared with 27 million ordinary Malaysians of 9 million working Malaysians who earn below RM 3,000 a month than parcelling out to wealthy Malaysians and companies like the IPPs.
“The time has come for Malaysians to take direct benefit from such oil revenues when Malaysians do not see how the the RM53.3 billion in taxes and dividends contributed by Petronas to the government this year is spent.
“There is no reason why Malaysians cannot benefit directly from oil revenues when Malaysia is an oil exporter when an oil importer like Singapore, without a single drop of oil ,can afford to distribute S$2,500 every year to poor and middle-class families,” he added.

