14th December 2022 - 4 min read
Experts have urged the government to also look into identifying and addressing the root causes of rising prices of goods, even as it focuses on re-examining the country’s subsidy system. This is as both measures must go hand in hand to help the people manage their cost of living.
Senior education officer from the Consumers Association of Penang (CAP), N. V. Subbarow said that above all, the government must study how it can resolve agricultural output challenges. This, in turn, will help to safeguard the main source of food for the population – which will ultimately stabilise the prices of goods.
To illustrate his point, Subbarow highlighted the existing problem of egg shortage, which has forced Malaysia to temporarily import chicken eggs as a short-term solution. “They (farmers) said some of the chickens can no longer lay eggs, so the meat was sold to the market instead. The Agriculture and Food Security Ministry must look into the real issue instead of giving more and more subsidies to the producers. Similar issues have occurred with other livestock. I also know breeders of milk-producing goats who have sold off their livestock for the meat,” explained Subbarow.
In addition to that, Subbarow suggested for the government to increase the number of platforms for farmers to sell their products directly to consumers, or at least to authority bodies. This will then remove the problem of middlemen, which contributes to the rising prices of goods. A good option is to build more agricultural centres in the regions, thereby resolving farmers’ transportation issues.
“Some farmers have no choice but to sell their vegetables to middlemen as they don’t have the means to transport them far away. Centres located near their farms will greatly help these farmers with selling their products directly. Regular checks and enforcement actions would also help prevent profiteering among sellers,” Subbarow elaborated.
As for the proposed restructuring of subsidies, Subbarow believes that introducing a cap on the amount of subsidised electricity for domestic users will encourage them to become smarter consumers who avoid wastage. Commercial users or industries that receive subsidies, too, should ensure that the prices of their produced goods do reflect the aid. “It’s not fair for them to raise the prices when they also receive subsidies,” he said.
Meanwhile, economic analyst at the Putra Business School, Associate Professor Dr Ahmed Razman Abdul Latiff commented that although the government may mean well by providing targeted electricity subsidies only for B40 and M40 households to reduce their cost burden, this means manufacturers will be subjected to higher tariffs. In turn, it will cause them to pass on the cost by hiking up the prices of essential items.
“Without subsidies, larger corporations will have to push up the prices of their products to cope with the higher electricity tariff. Fuel production will also get more expensive next year since it is expected that the cost of purchasing coal and gas will be 2.5 times higher than now. If the higher tariff rates translate into price hikes for consumers, then the subsidy revamp will be a futile exercise,” said Dr Ahmed Razman.
Given this situation, Dr Ahmed Razman proposed for the government to provide monthly financial assistance for B40 and M40 households instead, catering to their daily expenses and necessities. These could be in the form of e-vouchers, which is more sustainable than giving cash handouts. This is as cash handouts will require the government to borrow more money, and as such raise the federal government debt.
E-vouchers, on the other hand, can be provided until Malaysia’s inflation is under control. Furthermore, the government can tap into the Bantuan Keluarga Malaysia (BKM) and Inland Revenue Board (LHDN) database to identify eligible recipients, said Dr Ahmed Razman.
Just yesterday, Prime Minister Datuk Seri Anwar Ibrahim had said that the government will look at reallocating blanket subsidies that are currently also benefitting wealthy individuals and conglomerates. He stressed that the subsidies are meant only for those in need, including individuals in the lower income group, and therefore should be implemented as such.
(Source: New Straits Times)
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