Geostrategic significance of South Asian countries.ppt
Subsidy Rationalization Lab
1. Opening
Presentation
Dato Sri Idris Jala
CEO of PEMANDU
Minister in Prime Minister’s Department
2. Setting the stage ....
The purpose of Subsidy Rationalisation
Lab Open Day :
To share lab findings &
recommendations and seek
public feedback
To recommend a Subsidy
Rationalisation Roadmap
to the government
3. PM has
introduced
4 pillars to
achieve Vision 2020
1 Malaysia, People First, Performance Now
Government Transformation Programme
New Economic Model
10th Malaysia Plan
35. ..even higher than
Indonesia & Philippines
11.0
4.6
4.7
OECD
avg = 1.5%
Malaysia2 Swit- France United Indonesia India 3 China 4 Philippines
zerland Kingdom
37. Our subsidy bills in each
category is enormous
Social Fuel & Energy
RM RM
42.4 billion 23.5 billion
Infrastructure Food
RM RM
4.8 billion 3.4 billion
38. This is equal to ....
RM
= RM
74
billion subsidy
12,900
Per household
39. Somalians pay more
for fuel than
Malaysians
157
Average retail fuel price in 20081
th
place
US cents/litre
Singapore Somalia Thailand Malaysia
40. As a result, we consume
more fuel than
other countries..
Litres per capita
Malaysia
Singapore
Thailand
Indonesia
China
India
1997 2007
41. We will likely become a net
importer of petrol
by 2011
2010 net
importer Daily local demand
status at 8%
Thousand barrels
8% p.a. growth
pa growth Daily oil production
Per day
2008 09 10 11 12 13 14 2015
SOURCE: Petronas analysis
42. We have been giving
subsidies RM Billion in 2009
to the wrong Students
income All consumers
group Companies
Poor 1.7
Farmers &
0.2
Fishermen
Others 0.4
Total
43. We have the cheapest
cooking oil in the region..
Malaysia
Indonesia
Thailand
Brunei
Singapore
Price of cooking oil (1kg bottle)
RM, 2009
44. Our sugar price is the
lowest in the region too!
Malaysia
Thailand
Indonesia
Singapore
Philippines
Price of sugar
RM/kg, 2009
45. And the lowest price for
flour too..
Malaysia
Indonesia
Thailand
Philippines
Vietnam
Singapore
Price of flour (RM/kg, 2009)
46. We must live in the
real world..
We developed a
framework for
subsidy rationalisation
47. Principle 1
Focus on the Big Ticket Items
to achieve the big savings
(i.e Fuel, Gas / Electricity, Tolls)
48. Principle 2
Education is a human capital
investment and subsidy
should continue but we must
reduce wastage / abuse
49. Principle 3
Agriculture & Fisheries
are the mainstay of the
rural poor and
subsidies will continue
but must reduce
wastage / abuse
50. Principle 4
Healthcare is
necessary for a healthy
population / workforce
and subsidy should
continue but must
reduce wastage / abuse
51. Principle 5
We should continue to
subsidize the poor and
disadvantaged and must target
our subsidies better
(eg: welfare assistance, low
cost housing)
52. Principle 6
Rakyat engagement and
communications are critical
including engaging both sides
of the political divide
53. Principle 7
Subsidy rationalization must be
implemented on gradual / phase
basis, not big bang
54. Principle 8
Mitigation measures and
assistance are necessary to
cushion the monetary impact
(eg: stabilization fund and
subsistence allowance)
55. Let me now take you
through the subsidy
rationalisation roadmap &
mitigation measures…
56. Fuel prices will
be increased
gradually..
Petrol 15 sen / litre
Diesel 10 sen / litre
LPG + 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
57. Mitigation Plan
We will provide
cash rebate..
RM RM
54
Per person per motorbike
(less than 250cc)
126
Per person per car
(less than 1,000cc)
58. Mitigation Plan
This will cost the
government..
RM
526
Million per annum
61. Electricity
tariff will be
increased..
Gas price (Power) by RM 4.65 / MMBTU
Gas price (Non Power) by RM 2.52 / MMBTU
Electricity tariff by RM 0.024 / kWh
Thereafter, increase Gas Price (Power & Non Power) by RM
3.00 / MMBTU and Electricity tarif RM 0.016 / kWh every 6
months
62. Mitigation Plan
New tariff will not impact
56% of consumers
Percentage of households, 2009
No
Free Change
0-100 100-200 200-400 OVER 400
Distribution of usage (KWh/mth)
63. The government
will save....
Savings (RM millions) (Gas)
2010 2011 2012 2013 2014
1,121 4,524 7,502 10,396 12,346
RM
35.9
billion in 5 years
65. Mitigation Plan
Applicable
only for toll
highways
which have
alternative
routes...
66. Mitigation Plan
And we will
provide
discount for
toll users..
20% Discount upon
next reload
(for more than
80 transactions per month)
67. Mitigation Plan
This will cost the
government...
RM
60
million per year
68. In return, the
government
will save....
Savings (RM million) - Toll
2010 2011 2012 2013 2014
160.5 696 862 919 1,047
RM
3.7
billion in 5 years
69. Price of sugar, flour and
cooking oil will be
increased 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% every
year until Jan 2014
70. Mitigation Plan
You will receive...
Year 1 Year 2
▪ Cash rebate of RM20 to ▪ Discount through MyKasih
MyKad/ MyKid card holders card (for income below
through post-offices certain threshold)
▪ Use designated shops e.g.
SaveMore, petrol stations
at high poverty areas
RM RM
560
million per year
200
million per year
72. We will reduce
wastages & inefficiencies
Agriculture Education
▪ Usage of targeted ▪ Remove subsidies for foreign
fertilizers students
▪ Re-target subsidies for poor
families
Fisheries Health
▪ Increase diesel price ▪ Increase outpatient fees
▪ Increase incentives for (RM 1 RM 3)
fish caught (10 sen /kg) Poor will be continue to be
(50 sen/kg) fully subsided
▪ Maintain RM 200 monthly
allowance
73. We will reduce
wastages & inefficiencies
Agriculture
RM
Fisheries
Education
Health
16.3
billion over 5 years
74. We will save RM 103 billion
in 5 years 35,542
Fisheries, Paddy
Healthcare, Education, Welfare
Gas 29,510
Tolls
MKD, MasWings
Cooking oil, Sugar, Flour
Fuel
21,104
14,118
2,976
2010 1 2011 2012 2013 2014
RM million
