Idris Jala, PEMANDU CEO has been smacked real hard lately by various parties for quoting a higher subsidy figure than the ‘official’ Treasury’s figure.
Idris Jala’s figure shows total subsidies at RM74 billion last year is vastly higher from the Treasury’s ‘official’ figure of RM18.8 billion. Fortunately, Koh Tsu Koon said the figure Idris revealed is correct, while PM Najib insisted it was mere ‘projections’ – watch below.
Why is Idris Jala figure makes sense? Anil post here provides a clue. Government often talks about subsidy given to people but not those given to corporations or used in bailing out cronies than cost taxpayers billions more!
… a lot of the regular government spending on essential services for the people (which is the responsibility of any decent government and funded by taxpayers’ money) are ’subsidies’ which distort the market, blah-blah-blah.
Okay, you want to talk about subsidies, let’s talk about subsidies…
What happens when the government provides assistance to corporations either in cash (public money) or in kind? Then the government and their media refer to these handouts as incentives, tax allowances, soft loans, grants, special funds … anything but ’subsidies’, which is actually what they are! Of course, where the situation is dire, there are the rescue packages, compensation for cost over-runs, and the infamous bailouts (all using public money of course without being referred to as ’subsidies’).
I was flipping through the pages of The Edge (7 June) and came across this: did you know that Proton would have been “firmly in the red in the last three of five years without a government R&D grant booked as operating income”?
For FY2008, Proton made a net profit of RM184.5 million, but according to The Edge, its Annual Report showed it received a grant amounting to RM193.7 million for the year. If not for this “grant”, the firm would have made a loss of RM9.2 million.
For FY2010, Proton posted a net profit of RM289 million. But the firm received grants totalling RM143 million in the last two quarters, which was about half of its net profit for the year.
As Anil noted – that’s only to Proton – what about other corporations – such as Sime Darby which ran into over spending when rescuing Bakun.