Malaysia will be bankrupt by 2019 if........

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asked on May 28, 2010 at 09:14
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Updated: Thursday May 27, 2010 MYT 6:14:33 PM (From STAR online)

Idris Jala: M’sia must cut subsidies, debt by 2019 or risk bankruptcy
By TEH ENG HOCK and SHAUN HO

KUALA LUMPUR: Malaysia will be bankrupt by 2019 if it does not cut subsidies and rein in borrowings, said Minister in the Prime Minister’s Department Datuk Seri Idris Jala on Thursday.

He said that Malaysia's debt would rise to 100 percent of GDP by 2019 from the current 54% if it did not cut subsidies.

“We do not want to be another Greece,” he said when officiating the Subsidy Lab Open Day here to receive feedback from the public on subsidies.


Some of the recommendations of the subsidy rationalisation lab:

- Reduction of gas subsidy, resulting in an increase in electricity tariffs. However, most households will not be affected as the move will only affect those consuming more than 200kWh.

- Toll rates to increase in mid-2010 as per concession agreement except for highways without alternative toll-free routes.

-Outpatient treatment at public hospitals to be increased from RM1 to RM3. In-patient treatment will also increase, depending on the wards (Class One, Two or Three), from between RM3 and RM80, to between RM6 to RM160.

-Text book loan scheme and tuition subsidy aid to be abolished. Students will also have to pay for public examination fees.

-Foreign students will pay full fees at public universities.

-Local undergraduates and postgraduates to pay more in student fees, ranging from RM300 to RM800.

Meanwhile, Bernama reported Idris as saying that Malaysia was likely to become an oil importer as early as next year at the current rate it was consuming petroleum,

Malaysians continue to be among the highest fuel consumers per capita in the world fuel consumption habits pattern which generally has remained relatively unchanged despite increased oil prices in 2008.

He also said that approximately 70% of the government's liquid petroleum gas (LPG) subsidy went to commercial concerns and not the intended households.

About 30% of the cooking oil subsidy was also abused, he said.

He said the government is proposing to phase out the petrol subsidy gradually in line with its move to strategically position Malaysia's economy on a stronger footing to realise the aspirations of Vision 2020, which is to achieve a developed, high-income nation status.

"Subsidies are an inaccurate representation of trade," Idris said when officiating the Subsidy Lab Open Day here to receive feedback from the public on subsidies.

"In addition, they pose a fiscal burden that emerging economies such as Malaysia should move away from. As such, we desperately need an exit strategy for subsidies, as they are unsustainable," he said.

"In order to save the country, we need to increase our GDP, Malaysians need to be aware we are giving the highest subsidies - 4.6 per cent of GDP even higher than Indonesia (2.7 per cent) & Philippines (0.2 per cent)," said Idris, who is also the Chief Executive Officer of the Performance Management and Delivery Unit (PEMANDU).

Malaysia is one of the most subsidised nations in the world. Its total subsidy of RM74 billion in 2009 is equivalent to RM12,900 per household.

This covers the areas of Social (RM42.8bil), Fuel (RM23.5bil), Infrastructure (RM4.6bil) and Food amounting to RM3.1bil.

"All savings to reduce these savings are intended to reduce our deficit and debt of RM103bil in five years," he said.

Meanwhile, studies by Bank Negara have shown that inflation will rise to four per cent (2011-2012) and three per cent post 2013.

Subsidies only result in market distortion and they drain the government of much needed funds that could be better used for more strategic and pressing development projects for the rakyat, Idris said.

"The time for subsidy rationalisation is now," he said.

"We are reviewing the possibility of introducing a floating price mechanism, mitigation measures and assistance needed to put in place."

"We do not want to end up like Greece with a total debt of EUR300 billion. Our deficit rose to record high of RM47 billion last year."

"If the government continues at the rate of 12 per cent per annum, Malaysia could go bankrupt in 2019 with total debts amounting to RM1,158 billion," he cautioned.
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6 Answers
answered on May 28, 2010 at 10:04
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If Malaysia continues to be in debt at the current alarming rate,
I would not be surprised if Malaysia becomes like the Greece's debt crisis!

First it started in USA, then spread to Europe, and then what is next? - it can hit Asia !!!
If banks/big corporations can be bankrupted in USA, it can happen anywhere!

The good news is that if this happens in Malaysia, there are chances that
banks may not want to spend unnecessary legal fees to bankrupt people whose
debts have reached RM30,000 and above unless the debt recovery is worthwhile!

So, those people that may face bankruptcy in the future may not be bankrupted
as the creditor banks/institutions may find they have better things to do than
making those people bankrupt and getting little or zero recovery in return.

So guys and folks, this means we are all "set free" in advance!  Cheers!!!
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answered on May 28, 2010 at 19:40
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Thank you "Finance Analyst" for highlighting the financial predicament our country Malaysia is now facing. It is not a light matter as our future is already at stake. Ever wonder why our PM Najib took the trouble to visit many countries recently and the recent promotion of our Malaysia Tourism Industry by Dr Ng Yen Yen. Are not all these things to generate business for Malaysia? Where are we heading in next few years if our country does not implement some practical measures to save our country's increasing debt?
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Friday May 28, 2010

Tightening belts now will help future generations

KUALA LUMPUR: Subsidies address only our immediate needs but the consequences will be borne by future generations, warned Minister in the Prime Minister’s Department Datuk Seri Idris Jala.

The sentiment was echoed by many at the Subsidy Rationalisation Lab Open Day at the KL Convention Centre here yesterday.

Some also called on the MACC and Government to fight corruption, which they said inflated the budget deficit.

A company finance vice-president, Derrick Tan, 40, said reduced subsidies would affect the hospitality sector in food and transport costs, but would also increase efficiency.

A guest, who wanted to be known only as Thomas, said some subsidies were merely money thrown at unproductive activities. He agreed that reducing subsidies would benefit the nation in the long run.

He said he grew up in a poor part of Kuching and understood the need for subsidies to help the poor.

“But if the country goes bankrupt, everybody will be in trouble,” he said, adding that savings from subsidy cuts should go to the deserving.

However Nirfadilah Azit, 32, said that despite being acceptable as a proposal, implementing it should be done in stages to minimise the shock of the changes.

More than 2,000 guests attended the open day to hear Idris explain Government savings from cutting subsidies for fuel, healthcare, education, welfare, agriculture and fisheries, electricity, highway toll and essential food items like cooking oil, sugar and flour.

After his presentation, a six-member panel discussed the issue, moderated by The Star managing editor P. Gunasegaran.

The panelists were PJ Utara MP Tony Pua, Khazanah Nasional managing director Tan Sri Azman Mokhtar, Pemudah co-chairman Tan Sri Yong Poh Kon, UKM Institute of Ethnic Studies principal research fellow Datuk Dr Denison Jayasooria, Consumer Association of Penang vice-president Mohideen Abdul Kadir and MAS CEO Tengku Datuk Azmil Zahruddin.
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answered on May 28, 2010 at 21:55
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Dear Finance Analyst, I really wish you'll be right. About 2 months ago, I went to the JB immigration office to try to renew my passport. Due to a heavy traffic jam, I only reached there around 8.30 a.m. When I asked the guards there if there are any more Q numbers, they told me some people were already lining up as early as 2.00 a.m.! He then told me he can get me a Q number if I come back the next day, no waiting, just go straight in. Cost? RM50! I asked him why so much? His reply was, he has to share that RM50 with the others in the immigration office. To cut a long story short, I reported this matter to MACC and they took down all the details like time, date, etc. A few weeks later when I was there for other business, that 2 same guards were still there, happily getting rich. Here's the kicker: MACC's JB office is less than ONE minute walk from that guard house! Yes, WALK, not drive!
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answered on May 28, 2010 at 22:12
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then u waste ur ime lor coz they r abang adik...
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answered on May 29, 2010 at 04:56
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haha, you should be crying for living in such a corrupt country. If you've any sense, you'd know this is no funnay matter. If you do not have any intelligent thing to say, say it somewhere else.
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answered on May 29, 2010 at 06:03
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dear hope, i m so sorry to make u feel that i felt funny... i m wondering why?  i guess just because i put my nick name there...(haha) actually after reading ur post i want to give my opinion immediately and i didnt think much bout the nick name,just put there haha as my name has HAR..so sorry bout that

actually i also have bad experience with so called government department..
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