...and other pressing questions answered by Shahrir
Shahrir Abdul Samad...we can't be protectionist — picture by Choo Choy May
KUALA LUMPUR, June 4 – The government's last-minute decision that the fuel subsidy will be in the form of a rebate on the road tax has most of us confounded. After all, there was a lot of information given by Prime Minister Datuk Seri Abdullah Ahmad Badawi during his briefing with the media, and it'll take a while to digest the rest.
For now, the main question that many Malaysians want answered, in no fancy terms, is how to get our money back? Will it be instantaneous? Or do we have to wait weeks for the red tape to clear? What about those who've already paid their road tax? How will they claim the rebate? It's already the middle of the year. Do they still qualify?
Thankfully, the Domestic Trade and Consumer Affairs Minister, Datuk Shahrir Abdul Samad, stayed on after the prime minister left to clarify matters.
"Well, it starts for April (2008), right? It's applicable until March 2009," said Shahrir, adding that all Malaysians need do is claim their rebate through the post office, one of places we can all pay our road tax.
"They'll have to go back to the post office and they'll get their money back. Once pay the road tax, the post office will give you a money order (for the RM625 rebate) which you can put in your bank account," he explained.
He gamely stayed on to answer a host of other questions, concerning the ban of fuel to foreign-registered cars at border towns, taking down the import levy on cars, and why the government is implementing such a bureaucratic mechanism instead of cutting out red tape entirely
Q: Now that we're slowly moving towards paying "real" market prices for fuel, when can we expect to pay "real" market prices for cars?
Shahrir: Real market prices for cars ... that's very interesting. We'll certainly have to look at that because I think, as you well know, we have to operate under Afta (the Asean Free Trade Area is a trade agreement whereby all members of the Association of Southeast Asian Nations promise to support local manufacturing in the region) so certainly there are realities we have to confront and accept.
Q: Even under Afta, can we abolish that (current practice of inflated levies on imported vehicles)?
Shahrir: Yes. It'll have to happen. All these things are inevitable, just like we're taking the approach of having an open and more liberal market for steel bars and building materials like cement. We have to accept the facts of life; that we cannot be a protectionist economy, which is of course, the same for our local car production industry.
And we have to move quickly into a situation where we are competitive.
Q: Do you still abide by your August deadline (for such changes to take place)?
Shahrir: No. For all those things? None. The August deadline I'm talking about is for the subsidy management rather than the car industry. That's a bigger question for just the minister of domestic trade to answer. [chuckles] It's not fair to the minister of international trade.
Q: The subsidies don't mention anything for public (road) transport operators?
Shahrir: No, the public transport operators, there is a RM1.43 price for diesel. It's being maintained for all transportation, transport companies and all the groups that used to get subsidised diesel. You see, what has happened with diesel is that there used to be three prices for it – RM1 for the fishermen, RM1.20 for river transportation and RM1.43 for road transportation. So, we have moved it to one level, which is RM1.43, and taken out the fishermen to be looked at and looked after by the LKIM (Fisheries Development Board). So we are still maintaining the subsidy for diesel for the various economic sectors, the critical economic sectors like transportation, public transportation, you know, various categories.
Q: How will the government ensure enforcement?
Shahrir: Now it'll be easier because the government can concentrate on diesel and I'm meaning all the allocations. We have less things to look after. For example, the ban on sale of petrol (to foreign-registered cars) in the border areas (namely to Thailand. The ban to Singapore was to be implemented only on June 9). I can now lift it because the subsidy on petrol doesn't go (to non-Malaysians), except for the 30 sen a litre (discount available at the pumps), the foreign (registered) cars will not enjoy any (additional) subsidy.
Q: But our (fuel) rate is still lower than in the neighbouring countries, isn't it?
Shahrir: That's okay. That's alright. Our problem was, at that time when I imposed the ban, was that the foreign (registered) cars were enjoying the subsidy.
Q: So the ban will be lifted with immediate effect?
Shahrir: It can be lifted tomorrow. Singapore won't even be a problem.
Q: How much will foreigners pay after that?
Shahrir: The pump price. You see, the problem before was, when you pay RM1.92, that's the subsidised price. Today, you pay RM2.70 per litre yet you don't get the subsidy unless you have a Malaysian car. So the subsidy goes back to Malaysian car owner. So that way, a foreign car owner will not enjoy the subsidy. So that's what I mean by putting the price at the pump towards market price, which is the system now, which is 30 sen below market price, and then deliver the subsidy in another way to the Malaysians. The (foreigners) still enjoy the 30 sen subsidy but they won't enjoy the 78 sen (per litre) subsidy.
Q: The Inflation Committee will be meeting once a month. So, next month if the price goes up?
Shahrir: There'll be an increase. But there'll always be a 30 sen subsidy per litre by the government.
Q: The Opposition has brought up in Parliament before; instead of all this red tape, why not just set everything at market prices and then the government gives an allowance, as some countries are doing, and direct the subsidies in the form of income tax rebate or something like that. Is that a viable option?
Shahrir: Well, there's only one million over people paying income tax out of 12 million employed [gasps heard, Shahrir checks his notebook]. We have a small tax base. I understand your point. We actually do need a better database and one of the ways of getting a better database is implement something like this, we can hopefully start improving our database. It takes time to set up the database, that's the problem. And you always deal with the income levels: which is the cut-off point; if we have RM1,500, so what happens to RM1,600 and then there are complications upon dependents, per capita, family income and so on.
It's not as straightforward as that. You have to do a lot of means tests and capability tests and so on and so forth. So, if you have a family of five and you earn RM2,500, and if you have a family of three and you earn RM2,000 (pause) it's quite complicated. Compiling that database is quite a challenge. So for the time being, we take the car subsidy approach; then you actually give to all Malaysians with the limit of up to 2,000cc (for cars). That package to me is still quite actable. But as I said, no system is perfect and we can always improve it as we go along.
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