Isnin, Mei 31, 2010

Living expenses to go up by 20% in 3 years

Press Digest by Kong See Hoh

PETALING JAYA (May 31, 2010):
IF the government starts to reduce various subsidies this year according to the proposed five-year subsidy rationalisation roadmap, the living expenses for the average household are expected to go up by at least 20% in three years. 

This estimate has not taken into consideration the resulting inflation, such as hikes in prices of goods, food items and service charges, Nanyang Siang Pau reported today. Once the government "passes on" the additional expenses to the consumers, the hardest hit will be those in the lower and middle-income brackets.

According to government statistics, the average household enjoyed RM12,900 in subsidies last year.
Minister in the Prime Minister's Department Datuk Seri Idris Jala, who is also the chief executive officer of the Performance Management and Delivery Unit (Pemandu), explained the subsidy rationalisation roadmap at the Subsidy Rationalisation Lab Open Day in Kuala Lumpur last Thursday.

The lab was held to get suggestions and feedback from the public on the government’s plan to gradually scrap the subsidies. Idris said if the current heavy subsidies continue, Malaysia would accumulate RM1,158 billion worth of debt by 2019, enough to take us into bankruptcy.

Government subsidies, which were introduced in 1961 under the Control of Supplies Act 1961, currently cover healthcare, social welfare, education, scholarships, fuels, electricity, toll, rail transport, edible oil, sugar, flour, white rice and fishery among others. Based on the daily’s estimates, an average family of four or five with two cars, two air-conditioners, and does its own cooking will have to foot a bill of close to RM10,000 a year on petrol, cooking oil, sugar, flour and electricity.

With the gradual removal of subsidies, the bill is estimated to go up by at least 20%. By conservative estimates, and based on the assumption that one of the two cars has an engine capacity of less than 1,000cc, the family will incur a petrol bill of RM650 a month for transport to the school and workplaces.
Although the small car will enjoy a yearly rebate of RM125, under the proposal subsidy rationalisation roadmap, the above household will have to fork out an average of RM848 a month by 2012, which is 30.5% more than now.

The power tariff is another area of concern. The government has given an assurance that 56% of the consumers will not be affected by the cut in power subsidy as households which consume less than 100kWh a month will continue to enjoy free electricity.

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