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Earlier today at the MSLS 08 forum on fuel subsidies, I asked a question on the effect on our fuel subsidies in keeping Singaporean food prices low. Tony Pua (DAP, MP – Petaling Jaya Utara) misconstrued the question and Nik Nazmi (PKR, ADUN – Seri Setia) didn’t address it, but Khairy Jamaluddin (UMNO, MP – Rembau) did addressed the question.

The gist of it is because transportation is subsidized in Malaysia, the subsidies move to Singapore in the form of lower prices there (in fact, in part due to heavy subsidies in Malaysia, prices in Singapore are low by first-world standards). Its the same way how all forms of production subsidies work: if a Singaporean buys a Proton, part of the price tag is being subsidized by the venerable Malaysian taxpayer.

In this case, it is particularly stupid: the reason why the government maintains (and probably will increase) subsidies for transport operators isn’t to protect them, rather, to protect consumers. It would be significantly more efficient to just give checks to the poor and middle class to cope with cost of living.

Oh by the way, a little nugget of knowledge I learned today from a Bank Negara intern: despite my lower-middle class dispositions, I’m actually in the top-4% of Malaysia in terms of household income. And Malaysia has the highest Gini coefficient in Southeast Asia: higher than the usual suspects like Indonesia and the Philippines. Scary.

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2 Comments

  1. Uh dude, that’s really really old news. Income inequality in Malaysia is incredibly bad. Our “middle class” is actually an upper class – count yourself lucky if your household earns more than RM5,000 a month because you’re probably already in the top half if not third of the income distribution.

  2. http://www.aliran.com/index.php?option=com_content&view=article&id=661&joscclean=1&comment_id=209

    This is the table for household income. There are about 5.7 million households in malaysia. Average household income for year 2007 was RM3,686.


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