Subsidy Rational is at Ion Lab Open Day

8/8/2019 Subsidy Rational is at Ion 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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..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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We have the cheapest

cooking oil in the region..

Price of cooking oil (1kg bottle)RM, 2009

Brunei

Thailand

Indonesia

Singapore

Malaysia


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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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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 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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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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...will be saved

8.5RM

billion over 5 years

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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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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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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

Subsidy Rational is at Ion Lab Open Day

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