ID :
133157
Fri, 07/16/2010 - 13:29
Auther :
Shortlink :
https://oananews.org//node/133157
The shortlink copeid
SUBSIDY CUTS ARE SIGNAL OF PUSH IN ECONOMIC REFORMS, SAYS OSK RESEARCH
KUALA LUMPUR, June 16 (Bernama) -- The subsidy cuts in fuel, sugar and liquefied petroleum gas (LPG) by the Malaysian government, are a signal that economic reform is pushing ahead, says OSK Research.
"We have never been supportive of subsidies and these implemented
subsidy reductions are modest and thus, being more acceptable to the general
public.
"We believe it indicates that the present administration is again willing to
take the bull by the horns and push through further economic reform after a
pause of seven months," it said.
OSK also said it remained bullish on the FBM KLCI, particularly for
the fourth quarter, with an unchanged target of 1465 points at year-end.
According to OSK, while it is not suprised by the quantum of subsidy cuts,
which apart from sugar, are much smaller than originally proposed by Performance
Management and Delivery Unit (Pemandu), it was however, taken by suprise by the
speed of the implementation.
"We had felt that the government would resist making unpopular economic
reforms for now.But we believe, it has made the right decision.
"As the cuts are small, we feel that gas prices and toll rates will also
be adjusted in future, other than those for petrol and sugar," it added in a
research note Friday.
Prime Minister Najib Tun Razak announced the subsidy cuts
Thursday, effective July 16.
OSK said that the impact of the petrol price hike by 2.8 per cent only
for now, is expected to have limited impact on the auto, toll road and
retail sectors.
"The sugar price increase of 15 per cent should see some costs being passed
on to consumers but again, the impact on disposable income should be mild," it
noted.
OSK pointed out, if the more than RM750 million (US$1=RM3.2) saved in 2010
from the cuts alone is put to good use such as reducing public debt, it would
certainly benefit future generations of Malaysians.
However, if the savings are used to fund development projects, such as the
proposed KL Mass Rapid Transit (MRT), tight controls and open tenders should
preferably be implemented to avoid future accusations of leakage.
The research house also identified three potential beneficiaries, namely
Tenaga Nasional Bhd, Gamuda and MMC.
Tenaga may secure its tariff hike while Gamuda and MMC, may lobby for
subsidy savings to be used to fund the KL MRT project, which may then
start earlier rather than later.
"We expect more subsidy cuts to materialise. Sugar price may well be djusted
six months down the road while subsidies on gas prices could also be cut in
2011," it stated.
--BERNAMA
"We have never been supportive of subsidies and these implemented
subsidy reductions are modest and thus, being more acceptable to the general
public.
"We believe it indicates that the present administration is again willing to
take the bull by the horns and push through further economic reform after a
pause of seven months," it said.
OSK also said it remained bullish on the FBM KLCI, particularly for
the fourth quarter, with an unchanged target of 1465 points at year-end.
According to OSK, while it is not suprised by the quantum of subsidy cuts,
which apart from sugar, are much smaller than originally proposed by Performance
Management and Delivery Unit (Pemandu), it was however, taken by suprise by the
speed of the implementation.
"We had felt that the government would resist making unpopular economic
reforms for now.But we believe, it has made the right decision.
"As the cuts are small, we feel that gas prices and toll rates will also
be adjusted in future, other than those for petrol and sugar," it added in a
research note Friday.
Prime Minister Najib Tun Razak announced the subsidy cuts
Thursday, effective July 16.
OSK said that the impact of the petrol price hike by 2.8 per cent only
for now, is expected to have limited impact on the auto, toll road and
retail sectors.
"The sugar price increase of 15 per cent should see some costs being passed
on to consumers but again, the impact on disposable income should be mild," it
noted.
OSK pointed out, if the more than RM750 million (US$1=RM3.2) saved in 2010
from the cuts alone is put to good use such as reducing public debt, it would
certainly benefit future generations of Malaysians.
However, if the savings are used to fund development projects, such as the
proposed KL Mass Rapid Transit (MRT), tight controls and open tenders should
preferably be implemented to avoid future accusations of leakage.
The research house also identified three potential beneficiaries, namely
Tenaga Nasional Bhd, Gamuda and MMC.
Tenaga may secure its tariff hike while Gamuda and MMC, may lobby for
subsidy savings to be used to fund the KL MRT project, which may then
start earlier rather than later.
"We expect more subsidy cuts to materialise. Sugar price may well be djusted
six months down the road while subsidies on gas prices could also be cut in
2011," it stated.
--BERNAMA
