Subsidy cuts should not penalise consumers, and include corporations too

KUALA LUMPUR – Any subsidy rationalisation measure should take into account industrial subsidies as large business entities can absorb the impact of a price review better, as opposed to consumers, according to Asian Strategy and Leadership Institute (ASLI) Chief Executive Officer, Datuk Dr Micheal Yeoh.

“To be fair, the exercise should include the independent power producers and industrial users,” he was reported to have said, after the launch of the CFO Summit 2011, which was officiated by the Deputy Finance Minister, Senator Datuk Donald Lim Shiang Chai here yesterday. He also foresees the inflation rate moving closer to 4.0 percent if subsidies are rationalised.

“People need to be prepared as the government cannot afford any additional subsidies with oil prices continuing to rise. Unfortunately, when the government undertakes the subsidy rationalisation, prices of some products may go up. We need to have very strict enforcement to ensure consumers are not too badly affected,” he said.

Yeoh said the gross domestic product (GDP) this year may hover around 4.0-4.5 per cent, backed by a strong growth in electrical and electronics exports as well as palm oil, which may perhaps provide a buffer to any potential slow down in consumer demand.