Subsidies, economic growth and dependency

Malaysian lifestyle had been blended in with all kind of subsidies enjoyed by all layers. Some get more benefits and some less nevertheless everybody was benefited. Recent fuel charge hike shown the criticality of Malaysian dependency towards the subsidies.

While in the rural, farmers are subsidized with growth substance (baja), chemical control agent, seeds, etc plus exemption of tax, higher layers enjoys permits/rights, tax incentive, etc and all layers enjoys price control subsidies.

The root of this subsidization is to generate economy growth. While keeping the cost low for the public, government would enjoy the end tax return that would be greater relative to subsidy investment. Malaysian government had taken a step further of becoming the trader for most of the subsidized items/ elements. Agriculture product distributed by FAMA, RISDA, FELDA, etc. We see organization such LKIM for marine output. Crude oil by PETRONAS and the list would go on.

Malaysia actually operating like a big manufacturing plant whereby government placement at the top of the organization, not only as tax beneficiaries but the operational benefit itself.

Looking at Malaysia from ‘manufacturing plant’ perspective would reveal a new paradigm. As a ‘company’ called Malaysia, it is important to keep the labour and manufacturing cost low. Higher cost would mean less return for the same price. Having the total control of the ‘industry’ and supply network-making Malaysia as the sole body of local provider and enable itself to sell at premium without disrupting local demand elements.

Direct result from this action is high level of dependency of the public to government incentive. I am not sure whether it is the government failures on increasing the Malaysian living standards or they would like to keep this way to retain control to our dependant mindset.

Should we enjoy better standard of living, we would have greater purchasing power and less affected by rising cost of living. To make that happen, government should have a master plan on doing so. Countries revenues should be re-invested to the betterment of the public and benefit the public economic growth rather than stagnant and deteriorating living standard alone. Nevertheless, similar corporate bodies, individuals and foreigners are the largest beneficiaries of the re-investment.

Take Terengganu as a good example. Government is enjoying the crude oil sales profit, tax and royalties from Petronas. A large sum of the royalties belongs to Terengganu states and its people. Until today, Terengganu still lack of proper infrastructure, poor industrial growth and under-exploited tourism sectors all due to the royalties money did not came through fully as it should. Drive to Tasik Kenyir and you will see the ‘forgotten’ people of the royalties. Go to Kemaman and you will see the ‘great’ Pasar Payang and poor jetties. With the amount of money that should be there to develop Terengganu, I would expect to see full bloom agriculture industries, countless shopping mall with local people ownership/ partnership, free highway access to boom trading and tourism, marina for tourism, hi-tech fisheries jetties and high-tech marine processing industries. All these would create job and local wealth and with tourism sectors would add premium to local product and generate higher living standard throughout the local people.

What we are seeing in Malaysia is pretty much the opposite. Wealth distribution focused on individuals. Mega project benefit individuals and foreign contractors. High rank position monopolized by foreigners. Same group of people becoming directors to most of companies. Whilst actual funding to the public limited to ‘survival’ and further promotes dependency to the government.

Having said that, subsidization in Malaysia is merely to promote public dependency to government, keeping the cost low for the government by limiting public personal economy growth, ensure government role in distribution, and distracting public from government failures of total public economy growth.

To prove and express the level of our dependency to our government is the common phrase that we heard, asked and have to use for our betterment, ‘ada lubang’? Somehow, for whatever small or big scale business that we want to get ourselves into or even trying to get a job, the same question being asked or asked by ourselves of the existence of ‘lubang’. What is that actually tells you? You have to know somebody for you to move forward and most of the time that somebody is government people or linked to government people. No lubang mean 80% failures chances and that shows the level of manipulation that we have undergone to.

To sum up, do we actually require subsidies? The answer is no. But we need a better standard of living, fairness in wealth opportunities, better wealth distribution, better salary for working class, better return for local products to the producers, better infra-structure and low cost, toll free road and better government. Until then, we kind of depend on subsidies.