Unsustainable subsidies can impact future generations - Expert

SHAH ALAM –The current subsidies given by the government are seen as unsustainable, which will lead the government to borrow money in the long run and impact future generations.

Universiti Malaya Business and Economics Faculty deputy dean researcher Datin Associate Professor Dr Izlin Ismail said that the unsustainable subsidies, especially with the current prices of goods should be pushed towards a more realistic direction.

“A slow transition to a more realistic market price is much more sustainable in the long run because at the end of the day when a government does not have enough revenue to support it (subsidy), meaning they borrow to pay for it, it will be sustained by the next generations – your children and grandchildren.

“If you don’t have any children or grandchildren that’s fine, but we would be consuming it now and our grandchildren would be the ones paying for it, this is not something we advocate for our own family,” she said.

Izlin said this during the episode of Sinar Daily's Wacana English Edition programme entitled 'Cost of Living: Too hard to handle?' which also featured Fomca CEO Saravanan Thambirajah as another panellist.

Izlin said subsidies were difficult to stop and it might have been time for the government to push towards different methods of subsidies.

“One thing about subsidies is that once it starts it’s very difficult to stop as we would be conditioned to it and governments stating they could not afford to do so are looking to be decimated.

“The level of subsidies is looking to be unsustainable, it would not be wise for the present government to provide additional items subsidised as the costs for current subsidies are increasing in costs with base prices higher than what it was before.

“Perhaps they (government) are looking into targeted subsidies or even direct cash handouts so that the public can decide on what they wanted rather than everybody gets the same whether they are T1 (households with an average income of RM12,586) or the bottom 40 per cent (B40), you are paying the same price for your slice of bread or plate of rice,” she said.

For the record, Budget 2024 was expected to be tabled in Parliament on Oct 13 with a continued focus on the welfare of the people, extension and improvement of aid and assistance, as well as the development of the country's infrastructure.

Deputy Finance Minister II Steven Sim Chee Keong had said that more targeted subsidies for the people might be done in Budget 2024.

He said that the government had started a more targeted subsidies in January, and despite only affecting one per cent of industrial users it had saved almost RM4 billion.

Sim said the money saved could be channelled back into industrial development projects or directly towards people’s welfare projects.