Friday, May 28, 2010

Malaysia in Financial Distress?

Yesterday, I made my first visit to the Ireka Toastmasters Club and at their meeting, I took on the riole of a speech evaluator for their third speaker. Thanks to Soo Ling for the kind invitation. For an in-house club, their members are certainly enthusiastic, enlivening and effervescent. By the way, I also emerged Table Topics winner, even beating G Sivalingam, District 51 Table Topics first runner-up champion! I was delighted. Anyway, a great meeting was had here.
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Idris Jala, Minister in the Prime Minister's Department had ominously predicted that Malaysia would become bankrupt by 2019 if the Government debt continued to grow by 12% per year – meaning that unless we do something, our debt will equal our GDP (The Star, May 28, 2010, p N4). With our national spending unabated and a debt situation that is alarming, isn't this a possibility? Hmmm, didn't I said something to that effect some time back?
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Of course, what he was also trying to say was that Malaysians must learn to live without subsidies. Malaysia will save RM103 billion over the next five years if we do without subsidies now. This has a hollow ring to it because it was the Government that liberally gave out subsidies in the first place. And Idris Jala is right – if the Government makes this decision to do away with subsidies, it will be “the most unpopular decision the Government has made since Independence”.
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I bet that in the end, the Government will not eliminate subsidies totally – instead they will reduce them gradually, but there will be some subsidies still in place. They don't have the guts to quit subsidies altogether.
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Another point to note is that it is not only subsidies that we should eliminate. More worryingly, it is Government expenditure that has ballooned tremendously. Wasteful projects contributed much to this debt situation too. Petaling Jaya Utara MP Tony Pua also referred to subsidies to "crony companies” like independent power producers (IPPs) and toll concessionaires (ibid). The debts are coming to haunt us, and we should thank BN for what they have given us.

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