PKR dubs RM19b annual gas subsidies as lost income

By Lee Wei Lian, The Malaysian Insider

KUALA LUMPUR, Feb 5 – PKR focused on the RM19 billion annual gas subsidy in a forum on national TV last night, saying it should be stopped as it was lost revenue although a government strategist said it helped create jobs.

PKR strategy director Rafizi Ramli cited the study by Stanford University professor Jeff Rector in 2005 which purportedly showed that 81 per cent of the gas subsidies went to industries and businesses and only 19 per cent to the general public and the benefits of the gas subsidies ended up being “exported out” by industries.

“The dependence on gas subsidies has to be stopped,” said Rafizi in the forum televised by RTM1 at 10pm. “It is artificial competitiveness for the country.”

The abolishment of gas subsidies is one of the reforms proposed by Pakatan Rakyat (PR) if it takes over Putrajaya.

The proposed reforms are listed in its “Buku Jingga” document and include the abolishment of tolls and the repeal of the Internal Security Act.

Prime Minister Datuk Seri Najib Razak had called the reforms “too good to be true” and claimed that it would bankrupt the country.

Rafizi said, however, that the abolishment of the gas subsidy would help pay for the reforms.

“The government would get RM19 billion in revenue if there is no subsidy,” he added. The government was represented by Hulu Selangor MP P. Kamalanathan

Another panellist on the forum, chief executive of the Institute of Strategic and International Studies (ISIS), Datuk Mahani Zainal Abidin argued, however, that the gas subsidies helped create jobs.

“Even if 81 per cent of gas subsidies goes to export-oriented industries, it is still jobs,” she said. “If exports are affected, then jobs are lost.”

Mahani, who is also one of the authors of the Najib administration’s New Economic Model, admitted, however, that gas subsidies were undesirable in the long term but it was not something that could be changed overnight.

“Yes, we want higher gas prices but a sudden change is tough,” she said. “It is a complex issue.”