Center for Market Education CEO Carmelo Ferlito said a true strategy to help the poor should be centred on liberalisation.
“The government should gradually move towards market prices (for all), accompanied by a well-defined and feasible strategy to eliminate monopolies,” Ferlito told FMT.
“Public transportation and utility services such as electricity currently operate under a monopolistic regime and should be opened up to competition. This would benefit consumers by providing improved services and lower prices.”
His comments came in response to Prime Minister Anwar Ibrahim’s call last Tuesday to rationalise subsidies. Last week, Anwar said the subsidies bill for this year, including for food, fuel and electricity, is expected to exceed RM81 billion.
Ferlito said market liberalisation would create various sources of supply for services, resulting in increased competition and reducing market prices.
However, he cautioned that liberalisation should not be confused with privatisation.
“Transferring ownership of a government-owned company or service to private entities is unlikely to bring about significant reductions in market prices for consumers.
“Only through opening up the market and enhancing competition and accessibility can we gradually achieve the provision of goods and services at progressively lower prices,” he said.
Ferlito also said the process of liberalisation would take time, necessitating an interim solution.
“The government should offer these goods and services at market prices and provide targeted assistance to lower-income groups through vouchers calculated based on their respective income levels.
“Households in lower-income segments would receive vouchers they can use to acquire the products and services they require. Alternatively, they may opt to sell the vouchers if they do not intend to use them,” he said.
Bait Al-Amanah research analyst Yugendran Sivakumaran said the government should not focus on rationalising more subsidies, but should concentrate on effectively enforcing various policies already in place for many of its existing subsidies.
“The primary concern that the government must address is ensuring strict adherence to the regulations.
“This applies not only to petrol and electricity but also to various other sectors. If proper enforcement is not in place, the effectiveness of these measures becomes irrelevant,” he said.
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