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Subsidy reforms must be done gradually — ACCCIM

Publish date: Tue, 28 May 2024, 08:25 PM

KUALA LUMPUR (May 28): Subsidy reforms must be done gradually to prevent causing a big shock to consumers and businesses, said the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) president Tan Sri Low Kian Chuan.

He said such reforms need to be carefully planned and transparently executed to minimise  “inclusion and exclusion” errors and improve enforcement, making them more effective. 

“Small price increases are easier to swallow and allow the people and businesses to adapt to the new price situation over time,” he said in a statement on Tuesday.

He noted that over time, the fuel and energy subsidy rationalisation would compel small and medium enterprises (SMEs) to look for alternative and cleaner sources of energy, to optimise their operating costs and maintain competitiveness. 

“The government can provide tax incentives for SMEs to adopt renewable energy sources and energy-efficient technologies, to help reduce reliance on fossil fuels, easing the impact of fuel price fluctuations,” he said.

On that note, ACCCIM opined that a targeted diesel subsidy rationalisation is a step in the right direction, to ensure fiscal and debt sustainability and encourage environmentally sustainable practices.

The chambers said the targeted diesel subsidy rationalisation not only helps reduce the fiscal deficit, but also benefits the economy, as the subsidy savings (estimated to be at RM4 billion) can be rechanneled to productive sectors, such as healthcare, education and public transportation, as well as elderly care community services.

“We welcome the continued subsidies for public and goods transport vehicles, to help minimise the impact on inflation and business costs. Additionally, the RM200 monthly cash aid for eligible individuals will help mitigate the cascading effects of cost pass-through onto households,” it said.

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