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Sakmongkol ak 47

Sunday 30 May 2010

Subsidy-the Axe Man cometh!

Government, by definition, is that organization which has a monopoly on the legitimate initiation of force within a geographic area. Inherently, it must use force and the threat of force to impose its rules on others, no matter how these rules were derived.

Why would I begin this essay with the above foreboding paragraph? Simply because I think, this whole lab about subsidy rationalisation as a means to lower our perennial deficits is a veiled threat of force to impose new rules on us.

Who among us in particular? On the most vulnerable group- the poor and needy is the answer.

PM Najib has to take a serious look on this subsidy issue. What is the most important legacy of his father, the 2nd PM? Championing the cause of the poor is the likeliest answer. He was minister in charge of rural development. It wasn't a glamorous ministry, but development for the poor was close to his heart. He formed FELDA in the year Sakmongkol was born in 1956. To give land (wealth creating asset to the poor and disenfranchised.

Where is Idris Jala leading us? Cutting the 'real subsidies' going to the poor. Not exactly respecting the legacy of Tun Razak is it? But then, what does Idris "Al Dunlap' Jala knows? We shall be coming out with what he did at MAS. Coming soon. Khawp khun, Danke, Nandri , Repoman!

Does he know Tun Razak at all? Don't bother what the experts say. Ignore what Ramon Navaratnam says. Cut the government projects going to Sunway group and let's see whether he can sing Jangli Jangli Kahay still. Is cutting subsidies on the top of the priority list of cutting government deficits? Reduce by half the bloated and quality challenged civil service would be a better option.

Let's be clear who the recipients of government subsidies are. Government financial aid going to ordinary people is often really transfer payment, which is non compensatory. Meaning, the government gives them money without being compensated with anything from the recipients. Government financial aids going to businesses and industries, soft loans, etc- these are the real subsidies which should be compensatory.

The businesses and industries assisted by all sorts of subsidies ought to give us back in the form of better goods and services at a cheaper rate. IPPs get lots of subsidies, tax incentives and all that, including that kitchen sink, why aren't we getting cheaper electricity tariffs? Why do I get that I- owe -them -a -living service from the under qualified civil servant?

Now, which one is the government going to take away?

Somebody must be bonkers if they believed that selling off assets and booking them in and accordingly showing profits, is ONE brilliant move to bring MAS into the black once again. And fuel hedging? Not exactly rocket science. The executive in charge of budget airline Air Asia knows fuel hedging is one of the ways to reduce cost and therefore increase operational profitability. So doing fuel hedging is not a NOVELTY nor a big deal. If Jala who comes from Shell doesn't dabble in something he is familiar with, then maybe he should return to Sarawak to plant Bario rice.

The record at MAS by this minister- achieved by the above methods cannot be taken to impute extraordinary prowess at turning around things. We think he can do the same with our deficits by way of attacking subsidies which he fancies as the jugular? Nah- I don't think so.

So, the government has incurred deficits all the time. Is going after subsidies or more correctly, going after transfer payments (welfare, subsidies on food, diesel, sugar, and education) is the better line of attack to reduce our deficits?

What about wasteful spending?

The government has just owned up to the gravity of our deficits, we going bankrupt and all that yet at the same, we hear this shrill voice from Johor, insisting the crooked bridge must be built. What is so special about building this crooked bridge and must it be crooked? Also, didn't we hear just last week how everyone was singing praises at Malaysia being in the most competitive list? How do you reconcile this and the doomsday warning given by this Nostradamus from the land of the Hornbill?

We must be careful when we talk about subsidy? How much are pure subsidies and how much is transfer income? By treating it as one homogenous economic element, Jala is going to punish those who receive transfer incomes with those who receive subsidies. Differentiate the two. I am sure; this ability to differentiate these two wasn't taught at Shell.

Transfers which are straight income supplements need to be distinguished from subsidies. An unconditional transfer to an individual would augment his income and would be distributed over the entire range of his expenditures.

A subsidy however refers to a specific good, the relative price of which has been lowered because of the subsidy with a view to changing the consumption/ allocation decisions in favour of the subsidised goods. Even when subsidy is hundred percent, i.e. the good is supplied free of cost, it should be distinguished from an income-transfer (of an equivalent amount) which need not be spent exclusively on the subsidised good.

I can't put it any simpler- but then I am talking to the former boss of MAS and a former exec of Shell.

Transfers may be preferred to subsidies on the ground that any given expenditure of State funds will increase welfare more if it is given as an income-transfer rather than via subsidising the price of some commodities, and transfer payments can be better targeted at a specific income groups as compared to free or subsidised goods.

But the axe man came and bundled everything as subsidies. Subsidies in the form of soft loans, financial aid to IPPS-these ought to be removed immediately. But subsidies going to the poor? Only if PM Najib has a death wish. Anyone watches Charles Bronson movies anymore?

What is the primary objective of the government in saying that in 19 years, this country will go bankrupt? The deficit is so big that it has reached almost half of our GDP? Is this an overnight phenomenon? We didn't get to the stage of huge public debt overnight. It's the result of years of negligent and undisciplined spending like nobody's business.

The thing is, this yawning gap occurred under the watch of the BN government. In that sense this huge public debt is the outcome of the economic policies of the BN government. This Idris Jala maybe a loose cannon after all. I hope PM Najib must now realize that he needs to place people schooled in politics. Sure, in Shell they teach you to be audacious and the executive is always eager to make slides and PowerPoint presentations with much fanfare so that his immediate boss or the departmental bosses notice you. You operate on a different basis.

In politics, what you do, notwithstanding the brouhaha, have political ramifications. Failure is a lonely orphan, success has got many fathers. Right now, Idris Jala may be feeling orphaned.

What proportion do subsidy payments make up in the whole deficit budget?

You see- the problem with subsidies- it's the easiest economic parameter to attack. Subsidies are received by corporations and businesses and the most vulnerable groups in society- the poor and needy. Corporations and businesses especially those who have received favorable loan terms, have strong and vociferous representation. Navaratnam can speak on behalf of big business, chief economists can speak on behalf of the banks etc.

But what about the vulnerable groups? The poor and needy? Who represent them? Maybe Walla. Maybe Sakmongkol. Maybe Wenger. Maybe Donplaypuks.

When I was young, I remember the government of the day at that time ran austerity campaigns. They didn't cut back on subsides to the poor. Of course at that time, government did not give out dirt cheap loans to selected businesses and businessmen nor spent lavishly on unnecessary things. They took the road of persuading the people to go on austerity drive. Government stopped recruiting workers. The civil service remained manageable unlike now where it has reached 1.2 million in number. Practically 1 out of 25 Malaysian is a government servant. One public servant servicing 25 people would have given us sterling service. But what we get is arrogant and officious service blind to the fact, they, the majority of civil servants live off our money.

What is the primary objective of cutting subsidies- that portion of government expenditure that goes to selected sectors and recipients? If the subsidies go to selected producers of goods and services- what they offer us should be cheaper. Recipients who receive subsidies without offering the economy anything back, will experience increase in disposable income and spend it accordingly over a broad range of expenditure.

There are 2 groups who receive subsides. Producers of goods and services- IPPs, Infrastructure contractors, businesses given almost interest free loans from the government. This is one group. The other group include the recipients of what is more correctly termed as transfer incomes.

So when Idris Jala was telling is that what the government spent last year is equivalent to RM 12,900 per head, I am not sure whether this is a quantum divided by the whole population of Malaysia or recipients of subsidies only.

Where will the cuts come from? My main objection to this subsidy rationalization is, the cuts are directed at the most vulnerable group of all- the poor and low income earners who are poorly represented in any discussions involving them. Who represented the poor on the panel discussion? CAP? The man from Khazanah? Tony Pua? Idris Jala? The Royal blood?


vinnan,  30 May 2010 at 08:52  

'But what about the vulnerable groups? The poor and needy? Who represent them?'

PKR, DAP, PAS et al. Non from BN, that is for sure.

Go ahead cut the subsidies on food and fuel to the people. Make my day.

Anonymous,  30 May 2010 at 08:54  

You seem to have taken the war to Jala's door steps. Do you sincerely think that this is Jala's war. My perception is Jala is made a 'kambing hitam'. They the govt, your beloved party president have already decided on the subsidies that are going to go. Jalan is just a messenger. What the president of UMNO your beloved party could not utter directly made Jala do his dirty job for him. Yes, this is what the politicians do. They make someone else do their dirty job and when they find praise from the man on the street then they will quickly acknowledge that they are worth the commendations. In this case, the govt, party president of your beloved party is watching public reactions. If there is too much bad reactions from the public, the president will come forward like 'Superman' and console the public and start bashing Jala, just to save his and his party's image.
I totally agree with you that the lower income group and for the matter the middle income group too needs protection. Why hit on subsidies that effect the rakyat. The govt and president of UMNO should look within the gov to cut on subsidies.
First thing, the president should do is CUT, yes CUT his cabinet to only 7- 10 ministers only, maybe 5 assistant ministers. The senators should be halved. Why does the dewan Rakyat need 2 speakers. The govt ministries should be trimmed, followed by the civil service. The police force that is TOP HEAVY should be downsized. There are so many suggestions put forward by you yourself Dato that I think the gov should act on if they are sincere. But as you and the rest of the right thinking people 'rakyat' know the gov has no guts to cut down the ministries because that is where they feed their factions within their own party and other component parties of BN. The BN govt has ruled for over 50 years and they have become power crazy, maybe they are scared to give up power thinking that they will have to become refugees with all the shit they are going to leave behind.
But whatever, this is inevitable, power has got to go. We need a clean govt. I pray to Allah that he will change your heart and you should join the opposition to fight for justice for the people. Like Tengku Razaleigh has said, time for 'jolly katak' is over.

Anonymous,  30 May 2010 at 09:53  

Idris Jala is just a bureaucrat doing his job. He will not be the one to decide what to do. He is just pointing out what we should do. However he did leave out the savings we can get from plugging the inefficiencies in the govt. Leakages from corruption, rent seeking and big govt cannot be ignored. We should start fom these low hanging fruits before going for that pound of rakyat's flesh.

dua sen,  30 May 2010 at 10:23  

Govt's message.

Assistance to the rakyat = subsidy = toxic gesture

Assistance to cronies = commission = pat in the back !

Richard Cranium 30 May 2010 at 10:48  

Sir, you're an Umno person. Its safe to say that lots of your readers wo't hold that against you. You are giths in that it is time we put aside political grandstanding and fix the economy.

Richard Cranium 30 May 2010 at 10:54  

Privatising profits and socialising costs is a page from the American playbook.

Who is the brilliant person responsible for this? Yes, it was TDM himself. Saying that agreements were negotiated between the KSU/Ministry and the companies is disingenious.

Anonymous,  30 May 2010 at 11:14  

I disagree with Malaysia going bankrupt

I recalled "Islam Hadhari" era there were once issue - SUGAR habis!

Where did all the Sugar go? ANSWER
Crony UMNO i.e. Haggling pricing and reserved stock for the selected masses.

No Offense to Idris Jala which I believe he work on average speed on the turn around of MAS nonetheless work still work his neither Donald Trump - but MAS still below par and AirAsia has slapped them on the face spot on to finally waking up.

My apology for digress a little wee bit on MAS and now coming back to Subsidy and Malaysia going Pokai

I resent those people saying as I still see those 2 recent by erection - Pork Spending & Buying votes are rampant and at the same breath saying/claiming government SPENDING base on average MALAYSIANS which comes to RM12,900 per head, which is insulting to us Malaysians.

Dumb Ass - I dont get any visit from those so called "Banci" People asking me about this, why simply put, assuming that figure?

What happen to all those:-

1.Toll Rates jacked up in the past
2.Petrol Rates

and many more we the rakyat has been paying more than the actual value/quality





Anonymous,  30 May 2010 at 11:26  

great piece Sakmongkol, well done.

kuldeep 30 May 2010 at 11:59  

Idris have not done justice to his "so called" professionalism by not defining what constitutes subsidy.

Its no brainer that the RM 74 bil is not "subsidy" per se.But it serves as the perfect cover.

The possible direct subsidies would be electricity,gas,sugar,flour,
cooking oil and toll i.e about 28 bil or so.

But,out of the above..wat goes direct to the consumer is even less.Domestic elec billing is only RM 5 bil out of total Tenaga revenue of RM 28 bil.As an average a domestic consumer pays 27 sens/KWh whereas the industry pays 30 sen/KWh i.e indicating that there is no major tariff differential between domestic and industrials. Can't this be the first to be tweaked and optimised.

How much is Coke paying for sugar?How much is Gardenia paying for flour?How much are the unhealthy "snack food " manufacturers paying for cooking oil?And who consumes more gas..domestics with their bottle or two per month or the industries that buys by the tankful?

Industries/commercial have breathing space as the above items is not more then 10 % of their cost.If the subsidised prices is increased by affects cost by only 3%.And if they raise their prices,the consumer can still decide not to drink Coke,eat Cheezels,go shopping at Pavilion etc.

Jala have also not looked hard enough at Tenaga operations.The chosen bogeyman are the IPPs whereas Tenaga can optimise their generation mix to max on coal and yield immediate savings.Similarly,some of the hiway concessionaires have not met their QOS specs and should be penalised instead of compensated.

Frankly,the Subsidy Lab have done a really poor job..designed mainly to set the tone for ppl to accept the hikes.They shld look into optimising as a first step.

Repoman 30 May 2010 at 12:32  

Differentiate the two. I am sure; this ability to differentiate these two wasn't taught at Shell.

Go for it Dato! These guys are like big bullies after the people. Jala is responsible. If he was forced to say something as stupid as he said, he should have resigned first.

What a disappointment this PM is from his father. The apple has fallen far far far away from the tree!

TheWhisperer 30 May 2010 at 12:34  


Nice take!

Perhaps we should look or try find the true figure of our external debt to our national GDP.

For all we know, we are already near junk status. That's right! We are going to be a junk nation by ratings.

Last I know, we were very much above the 50% mark. By now, we should be hitting or nearing the 70% mark.

And the statistics department are still tampering with the figures with their 'now you see it, now you don't' maneuver..

Habib RAK 30 May 2010 at 12:41  

I appreciate your view AK47. Well said. So what is the key point. The government has power to raise revenue in billions. Then it spends it. The net result is, it spends more then it earns and has left us with an astronomically huge debt of RM362Billion as of end 2009. This is expected to grow further. To me, this is key message from Idris Jala. Its a verified fact. If this trend of expanding debt is not contained and reversed, we will indeed be on collision course. Thus, forget all other slides presented and just look at the Government Debt chart from 1997 to 2009 (actual figures) and the projected number from 2010 to 2020. The next very crucial point is, how do we contain and reverse this trend. Here, many good suggestion has already been given by the commentators. For me, this problem cannot be solved by the current government for obvious reasons. We need a new government. Once a new government is in place, the current government can go thru a medication process to heal themselves and once cured can offer their services in the future. Leaving it to the present government will ensure we suffer more pain. As you correctly said, this is not an overnight problem we are in, it had accumulated over the past 53years! So,would the one who put us here change their ways overnight?

Anonymous,  30 May 2010 at 12:41  

Anon 08.54

You have said it quite well. The fish gets rotten at the head first. Who is the head? Everybody knows the answer. The war should be taken to the door steps of the beloved party president. But how many members of the president's party dare to do it? Go figure it out. It is not difficult to get the answer in a system of political patronage. Lu tolong wa, wa tolong you lah bro....even if it is not the right thing to do.

Not Mal 30 May 2010 at 12:44  

Well, you Sakmongkol being a part of the evil UMNO is responsible for much of the malaise (see the MAL as in MALasia or MALay) that has enveloped MALasia.

Apologies for the reference to MALay but this is how the evil UMNO has now moulded many of the disfunctional Malays to become a race on clutches while accepting that there are many Malays who can compete with anyone in the rest of the world.

Malaise (pronounced /məˈleɪz/, mal-aze) is a feeling of general discomfort or uneasiness, an "out of sorts" feeling, often the first indication of an infection or other disease. Malaise is often defined in medicinal research as a "general feeling of being unwell".
The term is also often used figuratively in other contexts; for example, "economic malaise" refers to an economy that is stagnant or in recession.

Red Alfa 30 May 2010 at 12:49  

Salam Dato'

Yes, yes and yes on all counts we couldn't but agree with you more.

Cutting subsidies while saying we will be on target for 2020 (whatever is it now defined) will be the Killer! If you and most of us have got it and what's the Critical Success Factor should be, Idris Jala hasn't got it but is going on KPIs with how best to .... exactly what is it?

Anonymous,  30 May 2010 at 14:10 Perkasa rejected NEM. Najib said NEM has not been finalised. Is he back tracking after being threatened by Ib Ali? it is interesting to watch. Will Najib dare to snub Ib Ali since TDM is backing him? Ada telur to tell Ib Ali to shut-up? Anyway, Najib should ask Perkasa to register as a political party and contest against UMNO to see who has the support of the Malays. Let us wait and see what will

Anonymous,  30 May 2010 at 14:27  

Sudah habis lah.

Worse still next year we shall be net oil importer and oil is footing 40% of our budget.

High time to go global. Eat global, think global and die global.

Day will come (is already here?) when the people have less spending power, Industries and businesses will shrink and more money glows out through foreign workers while our own beg in the streets( or become maids or be gangsters ).

Those "Ibrahim Alis" will drive even more high eaners away with their capital (which means loss of more jobs)

Ask yourself or Ibrahim Ali, why until today Kampong Baru remains relatively undeveloped and now Govt realise to develop they need Chinese to be in that area? Come on Kampong Baru is not another ulu Kampong... it is in the very heart of Kuala Lumpur.

In this country, unless the people start to drop racism and start to face the challenges of global financial meltdown.. there is no way we can avoid bankcrupcy.

Today, those in the right group can walk away scotch free with billions of dollars embezzlement.
They only punishment? "Take leave"


Anonymous,  30 May 2010 at 14:30  

Dr.M,Why r u still insist to built the stupid crooket bridge to Singapore.What benefits do you have?Do u really care for the traffic jam on the Rakyat?Don't be so greedy,oldman and you r not the PM anymore.

Donplaypuks® 30 May 2010 at 16:00  


Jala's $12,900 is per family (of 5) and not per head.

we are all of 1 race, the Human Race

ralfie,  30 May 2010 at 16:49  

I don't understand why this is all Idris Jala's fault. He's only a messenger so it's really unfair for us to shoot him for delivering the message. Anyway, cutting the subsidies for the people seems like a good way for the government to continue practicing corruption and wastes without bankrupting the country the soon.

Donplaypuks® 30 May 2010 at 17:08  


Assuming the Govt is right and we have 40% poor in a worforce of 10 million, that's:

10 x 40% x 80% = 3.20 million Bumis and 0.80 million non-Bumis.

Common sense and economic theory - a combination of propensity to spend and the multiplier effect - tells us that it is in the
interest of ALL M'sians to help this 4 million poor to rise.

So, the weightage of affirmative action/NEP/NEM should be biased towardas this group in the form of cash/coupon/rebate subsidies and education/ scholarships, health and welfare amenities.

$1 of assistance to this group may see $10 in increase in economic activity as opposed to say $3 from the well to do. This is desired consumption as opposed to the 'shopping is my hobby' rabid consumption in the West and now that of their wannabes and imitators in China and India!!

More than that, when this 40% poor group comes out of the poverty trap, it will bring forth new entrepreneurs and commercial activity leading to true and lasting growth in GDP and per capita disposable incomes.

The problem over the last 40 years is that the bulk of national wealth has been surrendered in the form of subsidies and gifts to the rent seekers and as leakages (read as corrupt payments) to favoured croneys like the IPP, toll highway, water, AP and procurement sucking vampires and mafia!

The PM and Jala ought to know what the real issues are but pretend that the problems and solutions lie in cutting back subsidies to the very group which will be our savious in the medium to long-term!!

They should understand that non-Bumi Malaysians DO NOT object to properly formulated and executed affirmative action per se even if the main beneficiaries are Bumis, only the wastage and leakage costing $362 billion which threatens to bankrupt the whole nation!!

we are all of 1 race, the Human Race

A. Rizal,  30 May 2010 at 17:22  

Subsidies to business cronies = lower costs of doing business. Not passing these to consumers = higher selling price = higher profit. Boy, why am I not surprised that the rich get richer every year while the poor get poorer. The middle income group would be affected too. Hence the downfall of UMNO-BN. The sooner, the better.

walla 30 May 2010 at 18:06  

A: 'What's going to happen next, Sir?'

B: 'Let's scenario it out. The government is going to ram this one through, Sofea. Subsidies will be removed. They may do it spread over two years. I don't think they have a mandate to go beyond 2013.

But what's going to happen is that the poorer groups will suffer the most. And they are the biggest groups in this country. Remember what our Jedi master had written about the medium of instruction reversal? He said all will be punished by the market but the market will punish the Malays the most; similarly we will see the same result when the market starts militating higher payments.

Where are the poor going to find the money? Just look at what even the urban middle-income Malays buy when they go to places like Tesco. Scrawny udang, pampers, sacks of rice, cooking oil, fizzy drinks, frozen ramly burgers, t-shirts and uniforms for the young ones, washing powder....

When subsidies are removed, the expectation of inflation preying on peoples' mind will spike and cause everyone to start raising prices in other things, besides the usual rash of hoardings. Both these will in turn trigger the rise in things like rentals which will in turn be used as a reason to raise prices, in much the same way the price of a cuppa will be raised despite kurang manis just because they say sugar price has gone up. It's a vicious cycle spiraling down.

So when the poor start raising hell, again two things are going to happen.

First, NGO's like Perkasa will mount their high horses, gallop to the town court and start shooting. Then we can kiss goodbye to 1Malaysia at exactly the time it is needed the most to mend fences and build futures.

Secondly, the government is going to react by casting a wider social net. It is going to spend more and more to dole out money for the poor; under that stressed situation, the criteria to distribute will not only be controversial but they will also create opportunities for leakage and siphonage; maybe thirty percent will be distributed to those who don't need it.

Therefore, the end result is that as the subsidies are removed by the right hand, their quantum will be returned as social net items by the left hand in a process that is going to worsen the financial situation - because it will become an official and national distribution scheme open to all manners of malpractices.

What does all this mean? Again, it means two things - one, the treasury will still bleed to death in nine years' time when the national debt hits a trillion ringgit, and two, the really important issue - government and political corruption - will remain unaddressed, possibly worsened, in fact - because when the situation gets bad, it will be every napoleon for himself.

What all this is showing us is that the government has panicked and in its state of mind, it has drawn its own wagons together and created the 'them-and-us' mentality that walla had spoken before.'

walla 30 May 2010 at 18:06  


Now, if our situation gets worse, the government will increasingly not be able to depend on the only instrument it has to dig itself out of its financial black-hole. It cannot use future bond money to pay present bond holders. The ponzification of national financials should only be a theme subscribed by weekend-free thriller novelists. So how, next?

The only thing that the government can do next is to take hold of itself, not the rakyat.

This government must cut the crap talk and show it can drive its own austerity program targeting itself. No more canal management survey in Disneyland. No more Umno mansions in remote towns. No more mega-inflated contracts from negotiated tenders to fuel patronage for political leverage. No more wild procurements of four hundred ringgit screwdrivers. And please, your Majesties, think of the rakyat, i beg of You's.

At the same time, it must focus on what the rakyat are going through. It must reveal what the last CPI survey and household survey are hiding. The country must know how people are really coping or otherwise, and what is the bottom-line of the households in every place. Pay attention to how much they make inasmuch how much they spend or are committed to pay. I hate to say it but it's cashflow. Just imagine, ninety percent on EPF will run out of their savings within three years upon retirement. And if our economy goes down, how are their working young going to support them when they can't even support themselves? Chilling, isn't it?

Thirdly, redefine "probusiness" where it can hit max. If the private sector is to be the engine of growth, don't let it sputter because of bureaucratic or racial or corruption constraints. Lubricate it by making it easier for all businesses to expand and grow faster where they can deliver jobs and bring in fresh income.

Fourthly, lay to rest anything that is racialist. By closing first choice places to some courses from meriting non-bumi applicants, the Mohe is still playing uni admissions games. Just create more places so that our bumi's don't lose out. Spread out the demand across the system so that meritocracy is really and always championed and safeguarded. Last year we lost three hundred and fifty thousand. Do we have to lose a million of future taxpayers before the government and Umno come to their senses? The rakyat know everything that is going on.'

A: 'Terima kasih, Sir.'

B: 'Since we are on the matter of how the government has defined "subsidies", please define "kasih" as well, Sofea.'

A: 'I see poverty has not dented your sense of adventure, Sir.'

B: 'What else is there in this life, Sofea?'

walla 30 May 2010 at 18:06  


A: 'I see what you mean, Tun. Out of the blue, the rakyat are told we may be bankrupt in nine years time. Now, we know the scope of what constitutes a subsidy has been extended with almost wild abandon. Which means the amount subsidized is much less than what has been said. Which means the financial matter is actually much less. So i ask if that be the case, how come we will be bankrupt in nine years time if we don't remove those subsidies?'

B: 'Sofea, i share your thoughts too. My take is that it is not so much the subsidy element but the expenditure element. The expenditure element has gone amok; the government suddenly realizes it has ballooning current liabilities which it cannot discharge.

We knew that when they pulled wool by saying the stimuli packages totaled sixty seven billion ringgit when it was actually less than twenty billion ringgit, the rest being used to re-rate holdings. Remember me asking how come there were so few visible projects around for packages presumably so big?

In short, the government is outa cashflow; Soros may call that negative reflexivity, although i actually disdain mentioning his name.

The fact is this government has no new income sources. For years it has been puffing around like a fat peacock when oil was gushing. Now that the spigots will be unequal to the demand come next year, that peacock is going to be a feather-duster.'

A: 'Sir, that expenditure element you mention is what our Jedi master is saying - the transfer payment aspect -that is ballooning the costs. As one rakan had mentioned, a project costs ninety million but is bought for two hundred and ninety seven million. Like this, how can the country survive? No point putting up all those government transformasi charts and what not.'

B: 'We have all been struggling through a fool's paradise for too long, Sofea. Pardon me for saying, the rakyat have all been screwed.

Just grab a few examples. When it was billed, that egyptian crocodile's rationale for KLIA was "it's cheap" at nine billion ringgit. But after it has been completed, we are now learning for the first time that the government has been paying one billion ringgit every year to, what's the word, "subsidize", it. So, let me ask how many billions have been paid so far to "subsidize" a sub-utilized airport terminal that's only seeing a few paying airlines as patrons?

walla 30 May 2010 at 18:06  


And while i am happy youngsters will get decent meals and a roof over their heads, how big is the group when they say nine hundred and six million ringgit a year went to makanan asrama? Let's say it's ten ringgit three meals three hundred plus days a year. That's ten thousand meal-ringgit per person so are we hosteling ninety thousand persons a year? Or, one hundred and eighty thousand persons a year if it's a five ringgit meal? Only my fingers are counting this one, Sofea, and it still doesn't jive.

And then there's this matter of the tolls. One banker who had helped craft the payment schedule for Plus has now admitted that when they started, there was no precedent so naturally they used the most conservative estimates for traffic and thus revenue. Now that we all can see how jammed are those tolled roads, the profit must have gone over the roof which means the profit estimates were underprovided so the suggestion now is that tolls can be cut by twenty percent and never to be raised again, ever. I want to ask what's EPU gonna do about this eye-popping revelation.

On the same matter of the motor industry, it's a mess. Eighty percent of motorists are subsidizing the twenty percent who have caused the premiums to be too high by excessive claims further inflated by the workshops. We pay too much for cars, for their maintenance and for their insurance.

And then the urban motorists have to watch out for ever so free pouncing traffic cops and summons agents from cityhalls in cities with insufficient car parks because of poor planning on top of an un-integrated public transport system which is pushing people to buy their own cars now only to lose their resale value soon because petrol prices are going to be hiked!'

A: 'Sir, you're not only handsome but ever so smart.'

B: 'But poor, Sofea. Since i already don't have anything on me, i have nothing to lose. Except this life. Hahaha.

But i am worried for the rakyat. Just think about it, Sofea, what's going to happen to those amanah saham when the rakyat want to cash them? Where is the government going to get the money to pay them? Take from the EPF kah? Issue more sovereign bonds kah?

You know, the uptake for the last set of bonds was sub-par. Meaning the world may be flush with cash but it's not coming here.

Anonymous,  30 May 2010 at 18:17  

This same messenger also said on Thursday April 16, 2009 " MAS with RM3.57bil surplus cash eyeing to buy another airline". Later in 2010, MAS had to raise RM 2.7 billions to buy new aircraft. The truth is, Jala failed his economics and he should stick with his NKRA, KPI and Industrial Relations.

Roti Jala.

Anonymous,  30 May 2010 at 18:47  

Idris Jala,if you have any honour left in you, please resign immediately from your govt post coz you know very well that you too earn subsidized salary from the rakyat and that is more reason you should step down immediately, reasons being, you are being told by the govt to 'tell us off' the rakyat about the impending bankruptcy of the nation in 2019.
I am quite certain you in your capacity as a learned person, well educated and coming from the renown corporate organization Shell, know the reasons why the nation is going towards bankruptcy as you claim. It's not because the poor get subsidized fuel,gas, sugar etc.It's because the nations political system thats eating up our resources. The BN govt for the past 53 years has screwed up this country. Look at the govt leaders from UMNO,MCA,MIC down to the level of division heads having bulging tummies and enjoying life while the poor are struggling.They have mismanaged the economies throughout their rule. Compare us to Singapore. What natural resources do they have; nothing? yet they prosper while we with all natural resources still suffer. All ex PM's beginning with Mahathir are filthy rich and are still drawing millions from the govt coffers under all kinds of posts hel by them. Their children are filthy rich too. Their son in laws filthy rich too.
Tell the PM, he doesn't need 50 plus ministers and assistant ministers in his cabinet. All he needs is some 7 brilliant minsters who use their head and not the 'taukeh's' head when making decisions that affect the govt/rakyats money. We have hundreds of parliamentary secretaries for what? Then the cost of running these ministries beginning from salaries, allowance's,logistical support running into I guess hundreds of million ringgit. Also, tell the PM, he and his Deputy need not go visiting countries across the globe with full security force. It's a waste of public funds.Tell the PM that the govt should with immediate effect cut down the civil service beginning with the police top brass. The military expansion programme, buying all kinds of weaponry as though the country is under 'alien' attack coz I don't see any threat from any neighboring nation. The PDRM seems to be dictating terms to the govt with unnecessary expansions that do not benefit the rakyat at all.The list can go on and on...but what's the use if you educated people have no guts to stand-up against a vicious govt.

Anonymous,  30 May 2010 at 19:28  


Seems it is all doom and gloom. So in the event BN is re-elected, would you blame me for migrating? Will I be called unpatriotic?

Anonymous,  30 May 2010 at 19:45  

Dear Dato,

The more confusing I am getting with the subsidy.

Now,you are saying that its no good and if we setuju paying more now cannot help country avoiding bankrupt.Is why because the more we paying the more BN will spending to make their friends even get the more richer.

Now I driving my Kancil I am also pay toll same as Mr Rich man pay toll for his Porch Cayin?Then better YB Dato Seri Idris no giving subsidy for toll.I can take bus so no need pay toll.Mr Rich Man not taking bus pay bigger toll.Then toll man can make bigger money can paying more tax.Government have more money so no need to increasing rice,school fees and no need go bankrupt.

My friend from Indonesia say we got too many Ministers.She say Minister Mulyadi got pay only 20% of Dato Seri Che Haji Khalib the letrik boss but looking after more money.SBY look after more rakyat in bigger country like many islands but not have so many Ministers help as our PM and not having big private jet.Is this because we are High Income Economy?But the Yb Dato Seri Idris say we are bankrupt.So,I am thinking we are High Spending economy which is not good.

This confusing simple man like me.I am don't know what to thinking.Is YB dato Seri Nila Utama Wira Yorais talk soon and make us to know.

Mat Biasa

Eyes Wide Open 30 May 2010 at 20:17  

not only the poor will be adversely affected. The lower middle class will see their lives drastically changed.

E.g. a family with a RM5000 income saves RM1000 after deducting expenses such as house/car installments, utility bills, insurance, food, etc.

If subsidy withdrawal raises cost of living on average of 30%, their RM4000 expenditure per month now becomes RM5,200. Meanwhile, we can be pretty sure that salaries will not rise as companies will be struggling to keep costs down and the easiest thing to squeeze are wages.

So you have a family who was relatively comfortable suddenly unable to sustain themselves within a space of a couple of years.

Even if the family were to practise austerity, they would have no savings for emergencies or their children's future education.

The govt may or may not go bankrupt with the subsidy withdrawals, but I can assure you that it will be disaster for large swaths of the population.

flyer168 31 May 2010 at 01:33  


"Subsidy-the Axe Man cometh!" Unquote.

Just want to share this with you...

The following document, dated May 1979, was found on July 7, 1986, in an IBM copier that had been purchased at a surplus sale.
Excerpt from "Behold a pale horse" by William Cooper, Light Technology Publishing, 1991.

Silent Weapons for Quiet Wars

Descriptive Introduction of the Silent Weapon

Everything that is expected from an ordinary weapon is expected from a silent weapon by its creators, but only in its own manner of functioning.

It shoots situations, instead of bullets; propelled by data processing, instead of chemical reaction (explosion); originating from bits of data, instead of grains of gunpowder; from a computer, instead of a gun; operated by a computer programmer, instead of a marksman; under the orders of a banking magnate, instead of a military general.

It makes no obvious explosive noises, causes no obvious physical or mental injuries, and does not obviously interfere with anyone's daily social life.

Yet it makes an unmistakable "noise," causes unmistakable physical and mental damage, and unmistakably interferes with the daily social life, i.e., unmistakable to a trained observer, one who knows what to look for.

The public cannot comprehend this weapon, and therefore cannot believe that they are being attacked and subdued by a weapon.

The public might instinctively feel that something is wrong, but that is because of the technical nature of the silent weapon, they cannot express their feeling in a rational way, or handle the problem with intelligence.

Therefore, they do not know how to cry for help, and do not know how to associate with others to defend themselves against it.

When a silent weapon is applied gradually, the public adjusts/adapts to its presence and learns to tolerate its encroachment on their lives until the pressure (psychological via economic) becomes too great and they crack up.

Therefore, the silent weapon is a type of biological warfare. It attacks the vitality, options, and mobility of the individuals of a society by knowing, understanding, manipulating, and attacking their sources of natural and social energy, and their physical, mental, and emotional strengths and weaknesses.

Theoretical Introduction

Give me control over a nation's currency, and I care not who makes its laws.

- Mayer Amschel Rothschild (1743 - 1812)

They must eventually resort to war to balance the account, because war ultimately is merely the act of destroying the creditor, and the politicians are the publicly hired hit men that justify the act to keep the responsibility and blood off the public conscience. (See section on consent factors and social-economic structuring.)

If the people really cared about their fellow man, they would control their appetites (greed, procreation, etc.) so that they would not have to operate on a credit or welfare social system which steals from the worker to satisfy the bum.

Since most of the general public will not exercise restraint, there are only two alternatives to reduce the economic inductance of the system.

Let the populace bludgeon each other to death in war, which will only result in a total destruction of the living earth.

Take control of the world by the use of economic "silent weapons" in a form of "quiet warfare" and reduce the economic inductance of the world to a safe level by a process of benevolent slavery and genocide.

The latter option has been taken as the obviously better option. At this point it should be crystal clear to the reader why absolute secrecy about the silent weapons is necessary. The general public refuses to improve its own mentality and its faith in its fellow man. It has become a herd of proliferating barbarians, and, so to speak, a blight upon the face of the earth.

Contd...Part 2/3

flyer168 31 May 2010 at 01:37  

Part 2/3

They do not care enough about economic science to learn why they have not been able to avoid war despite religious morality, and their religious or self-gratifying refusal to deal with earthly problems renders the solution of the earthly problem unreachable to them.

It is left to those few who are truly willing to think and survive as the fittest to survive, to solve the problem for themselves as the few who really care. Otherwise, exposure of the silent weapon would destroy our only hope of preserving the seed of the future true humanity...

Economic Shock Testing

In recent times, the application of Operations Research to the study of the public economy has been obvious for anyone who understands the principles of shock testing.

In the shock testing of an aircraft airframe, the recoil impulse of firing a gun mounted on that airframe causes shock waves in that structure which tell aviation engineers the conditions under which some parts of the airplane or the whole airplane or its wings will start to vibrate or flutter like a guitar string, a flute reed, or a tuning fork, and disintegrate or fall apart in flight.

Economic engineers achieve the same result in studying the behavior of the economy and the consumer public by carefully selecting a staple commodity such as beef, coffee, gasoline, or sugar, and then causing a sudden change or shock in its price or availability, thus kicking everybody's budget and buying habits out of shape.

They then observe the shock waves which result by monitoring the changes in advertising, prices, and sales of that and other commodities.

The objective of such studies is to acquire the know-how to set the public economy into a predictable state of motion or change, even a controlled self-destructive state of motion which will convince the public that certain "expert" people should take control of the money system and reestablish security (rather than liberty and justice) for all.

When the subject citizens are rendered unable to control their financial affairs, they, of course, become totally enslaved, a source of cheap labor.

Not only the prices of commodities, but also the availability of labor can be used as the means of shock testing. Labor strikes deliver excellent tests shocks to an economy, especially in the critical service areas of trucking (transportation), communication, public utilities (energy, water, garbage collection), etc.

By shock testing, it is found that there is a direct relationship between the availability of money flowing in an economy and the real psychological outlook and response of masses of people dependent upon that availability.

Contd....Part 3/3

flyer168 31 May 2010 at 01:45  

Part 3/3

For example, there is a measurable quantitative relationship between the price of gasoline and the probability that a person would experience a headache, feel a need to watch a violent movie, smoke a cigarette, or go to a tavern for a mug of beer.

It is most interesting that, by observing and measuring the economic models by which the public tries to run from their problems and escape from reality, and by applying the mathematical theory of Operations Research, it is possible to program computers to predict the most probable combination of created events (shocks) which will bring about a complete control and subjugation of the public through a subversion of the public economy (by shaking the plum tree)...

Introduction to Economic Amplifiers

Economic amplifiers are the active components of economic engineering. The basic characteristic of any amplifier (mechanical, electrical, or economic) is that it receives an input control signal and delivers energy from an independent energy source to a specified output terminal in a predictable relationship to that input control signal.

The simplest form of an economic amplifier is a device called advertising.

If a person is spoken to by a TV advertiser as if he were a twelve-year-old, then, due to suggestibility, he will, with a certain probability, respond or react to that suggestion with the uncritical response of a twelve-year-old and will reach into his economic reservoir and deliver its energy to buy that product on impulse when he passes it in the store.

An economic amplifier may have several inputs and output. Its response might be instantaneous or delayed. Its circuit symbol might be a rotary switch if its options are exclusive, qualitative, "go" or "no-go", or it might have its parametric input/output relationships specified by a matrix with internal energy sources represented.

Whatever its form might be, its purpose is to govern the flow of energy from a source to an output sink in direct relationship to an input control signal. For this reason, it is called an active circuit element or component.

Economic Amplifiers fall into classes called strategies, and, in comparison with electronic amplifiers, the specific internal functions of an economic amplifier are called logistical instead of electrical.

Therefore, economic amplifiers not only deliver power gain but also, in effect, are used to cause changes in the economic circuitry...more.

Well it is all focused towards the NWO using the Elite's Pawns...

Idris already has his "Elite Masters" promising him a place in the BN Sarawak govt (the carrot!) & finally to replace the White Haired Pehin...who knows!


Anonymous,  31 May 2010 at 09:06  

I fully respect your views. You are one special UMNO guy with some decency but you are dead wrong in just going after Jala on this issue.

Jala was presenting BN's views. He was specifically chosen to do this dirty job of announcing the unsavoury subsidy cuts because he is NOT from UMNO, not a Malay and a non-Party man.

Tell me, which UMNO Minister will stick out his neck with this report.

He is the government's spokesman.

K H 31 May 2010 at 11:05  

" saying that in 19 years, this country will go bankrupt?"

I might be wrong, but I think it is 9 years instead of 19.

Wenger J. Khairy 31 May 2010 at 14:22  

Anon 9:06,
I think you miss the point completely. Jala was tasked to sell out the people.

He said Govt to be bankrupt by 2019 - true and correct if things continue as it is.

He then said the solution is to cut the subsidy, citing education, petrol and food as the major cause
- lie, lie and double lie.

He has at his disposal some of the most highly paid people on Govt salaries, up to RM 40k/MONTH
If this is the best that these guys can come up, does it show that the problem lies with the Government and now with the people.

So thats why Jala deserves to be roundly condemned?

Are you one those Pemandu folk.

Wait for Penumpang!

We will show the Pemandu what economic analyses common folk can do (poor souls like ourselves w/o requiring RM 40k/month and bullying the poor!)

Anonymous,  31 May 2010 at 14:56  

Now Deputy Minister MOHE is saying "scholarships" are subsidy...
Jalaism is striking deep.

Dato Sak & his band of commentators talks more sense then the highly paid goons running the govt.

Anonymous,  31 May 2010 at 16:51  


In the final analysis, as responsible 'rakyat', we can't depend on subsidy forever.

Subsidy should only be given over a fixed period to remedy certain unforeseen financial pitfalls.

If not properly administered, subsidy is like a drug that the 'rakyat' can get addicted to.

Anonymous,  1 June 2010 at 09:22  

Just thinking aloud and playing number games...

Govt says can save RM103b in subsidies next 4-5 years, so about RM23b a year of subsidy reduction. Auditor General 2008 report said the Govt could have lost as much as RM28b a year (based on a conservative estimate of 20% overcharging) due to overpaying for things from mega infra projects to outsourcing IT softwares and purchasing of furniture, laptops, not to mention delayed projects and cost overruns, with the blame on direct nego rather then genuine open tender. Maybe tackle this first before hacking and axing subsidies??!!!

And this RM12,900 per household subsidy average. Official statistics showed 80% of households in this country earn RM5,000 or less a month, or RM60,000 or less a year. Mampus laa camni kalau RM12,900 a year taken off... rise in poverty nampaknya, unless Govt impose minimum wage as mitigating measure. Ada berani kaa..??!!!


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