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Friday, April 9, 2010

The RM100 controversy — Lim Sue Goan

APRIL 8 — Women, Family and Community Development Minister Datuk Seri Shahrizat Abdul Jalil said that she felt ashamed and sad to read that the Pakatan Rakyat Penang state government only gave RM100 per annum for the welfare of senior citizens in Penang. It is wrong to say so!

Malaysians are earning low incomes and who will reject the offer? Even if the amount is small, it is nothing to be ashamed of or sad about, because this is human nature.
I talked to many people about the RM100 annual aid distribution in Penang and all of them said it was good. They believed that as they had “contributed” so much of income tax in the past, they should now get back some money. It would be better for the government to distribute money to the people than to spend it unreasonably. It would be best if the BN government could do the same. Moreover, they believed that the Penang government was more generous to distribute the RM100 aid to 83,000 registered senior citizens regardless of background compared to the central government that distributed RM300 of allowances monthly through the Malaysian Community Welfare Department (MCWD).
In fact, compared to the RM100 aid in Penang, the BN government has been “distributing more money” over the past 50 years. The only difference is, it does not distribute cash like the Penang government.
BN “distributes” money through subsidies for necessities, school meal fees for poor students, allowances for the disabled and free book loans. Bumiputeras enjoy even more subsidies.
The central government is managing the national accounts. In order to ensure the operation of the country, of course it has to impose taxes after tens of billions of money is distributed yearly. As such, the public is not able to obviously “feel” the subsidies provided by the central government, but they are more “attached to” the RM100 aid.
We must understand it will be difficult to recall once a subsidy is issued, just like the government is believed to lose a lot of votes once the petrol subsidy is removed. Therefore, it can only gradually reduce the subsidy. I wonder when the subsidy system will be abolished?
Although Malaysia is not a welfare state, it is already not far from it. The government’s subsidies are meant to assist the poor but such a subsidy mechanism that helps all regardless of background and income has weaken the competitiveness, efficiency and creativity of many people. And new subsidies are continuously proposed under various reasons.
Another challenge to reduce subsidies is, Malaysia is still a middle-low income economy. Only 20 per cent of the population are getting high income while 40 per cent of households are getting income less than RM1,500. Any action to reduce subsidies and increase prices, including the 100 per cent surge in stamp prices, will bring a certain level of pain.
Chinese economist Liang Xiaomin wrote in his book that market-oriented poverty alleviation should not be led or implemented personally by the government. The government’s responsibility is to help those who are unable to get rid of poverty by themselves (such as the disabled or elderly). The market-oriented poverty alleviation should be implemented by private sector.
There are too many weaknesses in the government’s subsidy-based poverty alleviation scheme, including under the predominance of politics, it is not focused on the target group, but is being abused. If it is not reviewed, Malaysians will become more and more dependent and eventually, it will be difficult to achieve the goal of the New Economic Model (NEM).
I hope that the country is able to achieve such a level in which everyone is rich and they are able to earn RM100 per hour. By then, who will still care about the RM100? —


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