Subsidy rationalisation ‘necessary evil’ for efficient economy, says professor

[superadmin]

KUALA LUMPUR – The removal of certain key subsidies may put a dent in the pockets of the majority of Malaysians, but is necessary to help the country’s economy prosper, according to an economist.

Sunway University economics professor Yeah Kim Leng argued that general subsidies granted by the government today are inefficient and could be better utilised on more productive uses with greater multiplier effects.

This includes building public infrastructure, spending on skills upgrading, ensuring technological improvement of industries, building affordable housing, and offering grants to smaller businesses.

More importantly, he said the rationalisation of subsidies will help improve Malaysia’s current precarious fiscal and debt positions.

But rather than removing subsidies at one go, Yeah suggested that this be done on a gradual basis to reduce its impact on consumers, and to offer targeted subsidies to the poor and underprivileged.

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