Sunday, May 30, 2010

Last Word on Subsidies

Today’s newspapers continue to talk about the subsidy issue. We have been told that Malaysia is one of the world's highest subsidized nations, spending RM74 billion last year. We were also told that the government has been giving the subsidies to the wrong income group. The poor, the target group for the subsidies, only got RM1.7 billion of the RM74 billion. Subsidies for fishermen were the smallest at RM200 million. Now, tell me, as I cower in severe embarrassment, whose fault is it? Shouldn’t the government shoulder the blame for not doing anything all these years?

Contrast this against other beneficiaries – students (RM30.8 billion), consumers (RM22.9 billion), companies (RM18 billion) and other groups (RM400 million). Okay, I can accept that we may need to assist students – education is important after all to develop and grow human capital – but what about the other groups? Do you realize that consumers and companies’ subsidies add up to a massive RM40.9 billion – these represent 55.3% of the total subsidy bill?

But at the risk of repeating myself – my fourth, actually – let’s not solely look at subsidies. There are leakages where hidden costs lurk that we should eliminate first.

Government bailouts between 1970 and 2007 totaled more than RM100 billion, the most recent being the RM4.6 billion Port Klang Free Trade Zone (Webpage
http://cpps.org.my/resource_centre/Corruption.pdf, accessed May 30, 2010).

The authoritative World Bank had estimated that the cost of corruption to Malaysia could be in the vicinity of RM10 billion per year, an amount that is equivalent to 1% or 2% of GDP (Webpage
http://biz.thestar.com.my/news/story.asp?file=/2010/5/17/business/6265327&sec=business, posted May 17, 2010). You'd better believe this! Even the always-under-fire MACC had once claimed that up to 60% of government allocations – running into billions of ringgit – meant for vital infrastructure projects in Sarawak between 2002 and 2008 have been misappropriated (Webpage http://thestar.com.my/news/story.asp?file=/2009/11/29/nation/5204180&sec=nation, posted November 29, 2009).

The annual Auditor-General’s Reports typically overflow with startling accounts of gross mismanagement of government funds. Kindly permit me to narrate just three examples and they are by no means, unusual or even remarkable. The 2002 report highlighted Yayasan Melaka, a foundation fully-owned by the state government to provide scholarship for poor students, purchased a door for RM25,000, toilet and floor mats worth RM11,000 and 25 designer briefcases worth RM38,750 among many others without calling for tenders or supporting quotations. Altogether, the foundation was found to have breached financial procedures in spending a total of RM639,423 (Webpage
http://www.malaysianbar.org.my/index2.php?option=com_content&do_pdf=1&id=11432, accessed May 30, 2010). The 2006 report highlighted the National Youth Skills Institute (under the Youth and Sports Ministry) project where a car jack that cost RM50 was bought for RM5,700, a digital camera that cost RM2,990 was bought for RM8,254 and RM1,146 was paid for a set of technical pens with a market price of RM160. The ministry was alleged to have spent RM8.39mil on equipment for its National Youth Skills Institutes (Webpage
http://omong.wordpress.com/category/sauditor-generals-report/, posted October 12, 2007). The 2008 report highlighted Kolej Kemahiran Tinggi Mara Balik Pulau in Penang paying RM42,320 for a laptop (Webpage
http://thestar.com.my/news/story.asp?file=/2009/10/22/nation/4953964&sec=nation, posted October 22, 2009).

Please, let’s get our facts right! Don’t just blame it on subsidies!

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