SECOND WAVE OF SUBSIDY RATIONALISATION TO HAVE MINIMAL IMPACT

PUTRAJAYA, Dec 4 (Bernama) -- The second wave of subsidy rationalisation is
expected to have minimal impact on inflation, says Performance Management and
Delivery Unit (Pemandu) Chief Executive Officer Idris Jala.

"(The) Impact is managable. We feel quite confident that inflation will be
managed. We don't want to see a situation similar to that in 2008 and 2009," he
told a special briefing on the second wave of subsidy rationalisation announced
here Friday.

Also present was Domestic Trade, Cooperative and Consumerism Minister Ismail
Sabri Yaakob.

The government on Friday announced a reduction in petrol, diesel, liquefied
petroleum gas (LPG) and sugar subsidies, effective Dec 4, as a second
step in its gradual subsidy rationalisation programme.

However, the government in keeping to its word in the gradual phasing out of
subsidies in order not to burden the rakyat, continued to maintain subsidy
prices on items like petrol, toll, sugar, flour and cooking oil.

The government pumped in about RM24.5 billion (US$1=RM3.14) in subsidies
last year or three per cent of Gross Domestic Product (GDP).

Subsidies for RON 95 petrol and diesel will be reduced by five sen a litre
and LPG by 5 sen a kilogramme while sugar 20 sen per kilogramme.

"That (time) was a very high level. Anything below four (per cent) or
five (per cent) is good. We are managing it because it only moves around three
(per cent) ..less than three (per cent)," he said.

The latest Consumer Price Index (CPI), an indicator for inflation, between
January and October increased 1.7 per cent to 113.8 compared with 111.9 recorded
in the same period last year.

Jala said the subsidy rationalisation, this time around, would allow
Malaysia to reduce government expenditure by about RM1.18 billion.

The first subsidy rationalisation had reduced government expenditure by more
than RM750 million.

The savings would be channeled to six National Key Result Areas (NKRAs) of
reducing crime, fighting corruption, improving student outcomes, raising living
standards of low-income households, improving rural basic infrastructure and,
improving urban public transport.

"We have reduced crime, since January, by 16 per cent and street crime by 38
per cent. We mobilised 14,222 police personnel into hot spot areas and have
installed 496 close circuit televisions.

"This year, we have put in place 20 sets of Light Rail Transit trains which
can carry 2.4 million passengers.

"We will commission a new bus terminal in Bandar Tasek Selatan, Cheras,
January next year costing about RM600 million," he said.

Jala said the minimal changes would help Malaysia achieve a position of
fiscal responsibility and "put us on the path towards reducing our deficit".

Asked on how much the deficit can be reduced, Jala said: "We are sticking to
the Tenth Malaysia Plan.

"Everything that we have to do is within the context of that. When we talk
about deficit level it depends on the revenue you accrue and the cost that can
be reduced.

"We will make sure we live within our means," he added.

The government is committed to reducing the country's fiscal deficit from
5.3 per cent of GDP this year to less than three per cent in 2015.

-- BERNAMA