SAVINGS FROM SUBSIDY TO BE USED FOR EDUCATION AND HEALTH SECTORS

KUALA LUMPUR, July 16 (Bernama) -- The price rationalisation for certain
goods announced Thursday will enable the government to reduce expenditure by
more than RM750 million (US$1=RM3.2) this year which will be allocated to the
more important sectors such as education and health, said Malaysian Prime
Minister Najib Tun Razak.

"This includes the government's announcement recently that all students
obtaining 9A+ and poor students who are eligible will get scholarships and
increased expenditure to provide health facilities such as the 1Malaysia
Clinics, including the 1Malaysia mobile clinics," he said.

In addition, the government would continue with the Standardisation of
Prices of Essential Goods in Sabah and Sarawak to reduce the burden on the rural
dwellers, he said in a statement Thursday.

Najib Thursday announced that the subsidy on fuel, specifically petrol,
diesel and liquified petroleum gas (LPG), as well as sugar, would be reduced as
the first step of a gradual subsidy rationalisation programme effective Friday.

He said the measures were designed to have a minimal impact on individual
families but bring long-term benefits for the nation.

"The reduction in expenditure from these reforms will allow us to better
use resources for families, communities and business growth," he added.

"The Government has made a difficult, but bold decision. By choosing to
implement these modest subsidy reforms, we have taken a crucial step in the
right direction towards meeting our commitment to reduce the fiscal deficit,
without overburdening the Malaysian people.

"These measures are a demonstration of our fiscal responsibility. They will
enhance Malaysia’s financial stability, while also protecting the people," he
added.

This marked the beginning of the implementation of the government subsidy
rationalisation programme which had been widely talked about in efforts to
reduce the increasing national subsidy burden borne by the government, prevent
smuggling and raise the competitiveness of the national economy.

Najib said the price rationalisation for fuel and sugar was the most minimal
compared to the proposal by the Subsidy Rationalisation Lab because the
government wanted to balance the public interest with the need to reduce the
national deficit.

On the other hand, he said the subsidy for education and health would be
maintained, and although there was rationalisation, the government still spent
about RM7.82 billion annually on subsidy for fuel and sugar.

He said the government arrived at this decision following robust
consultations with the people, not only with the policy makers in Putrajaya, but
thousands of Malaysians through the Subsidy Rationalisation Lab Open Day, online
voting, short messaging votes and feedback forms stating support for the review
on the granting of subsidy in stages.

Najib said the granting of subsidy had to be reviewed to remove distortions
in the marketplace and ensure that the subsidy was given to the deserving group.


"It is to enable us to better target our resources on those most in need,
and on investments that will provide lasting benefits for Malaysians."

The decision to rationalise the prices of fuel and sugar was based on three
main concerns, among which was the fact that all these subsidies did not meet
the target, as it also benefited those who were ineligible such as foreigners
and the wealthier Malaysians.

Excessive sugar subsidy benefited the industry instead of the family
because the business sector used almost twice as much subsidised sugar as
Malaysian households.

Furthermore, highly subsidised goods, which make these products the cheapest
in the region, led to illegal smuggling of these goods, said Najib.

Methods of using fuel and sugar must also be changed because excessive use
could quickly deplete the natural resources and not contribute to efforts at
protecting the environment.

"With 40 per cent of Malaysians who are now overweight or obese -- and the
rising number of diabetes cases -- we must tackle what is clearly a public
health issue for our nation," added Najib.

-- BERNAMA