Malaysians have long been accustomed to the culture of subsidies. Many goods, especially those categorized as "essential goods" are priced at lower-then-actual-market-rates simply because of government's price intervention. For example, the price of petrol in Malaysia is among the cheapest in the region, even when compared to other developing nations.
The Malaysian government subsidizes the cost by absorbing a portion of what would have been the actual market price of those goods in the hope of lessening the burden of poor households. The policy is costing the government billions of Ringgit each year.
However, in recent times the government is apparently trying to gradually end the culture of subsidies in Malaysia. I think it's possible that the idea came quite accidentally. During the height of the escalating petroleum prices, the government had no choice but to adjust the fuel prices in Malaysia. It used to subsidize heavily on petrol. By a mere adjustment of 20 sen to 30 sen, the government was able to save billions of Ringgit! Nevertheless, as the prices of petroleum continued to escalate, the government had since increased fuel prices quite substantially.
It's possible that after the experience with the fuel price increase, the government realised that they could actually save so much more if it could somehow withdraw the subsidies for all the other "essential goods" too.
But to do so immediately would have been politically fatal. Malaysians are so used to the culture of subsidies, it would be very difficult to change that mindset. Therefore, if the government wanted to withdraw any subsidy at all, it must have a very good reason for it!
Although Malaysians have long been consuming a high amount of sugar, the government was only recently taking steps to address the problem. Accordingly, the price of sugar has been adjusted by 20 sen, reportedly in the hope that Malaysians will now consume a bit lesser sugar in their diets. Apart from saving billions of Ringgit from the withdrawals of subsidies, the government can also reduce rampant smuggling of these "cheap" goods to neighbouring countries. I have not seen any drastic drop in sugar consumption in the population, but maybe I have not seen enough.
And then now a bolder plan has been formulated in the overall Ringgit-saving drive by setting a time frame of 5 years to remove the subsidies. I would expect that the many great thinkers in the government are hard at work to think of very good excuses for the removal of subsidies.
Personally, I am OK with the withdrawal of subsidies for the so-called "essential goods", except that I wonder if the government has conducted any study to determine whether a typical household income can afford the higher prices. And if they are plans to raise the incomes of the average Malaysian household, would it be sufficient to balance the increase in prices of goods. Those of us who're earning reasonably well wouldn't be substantially affected by the price adjustments, but when a household is earning barely enough, price increases can be devastating.
Apart from withdrawal of subsidies, the government is going a step further. I can't help but notice that the government is also trying to find ways to tax the people as much as possible to earn extra revenues. And so, for example, on the excuse of regulating credit cards in Malaysia, there is now a RM50 levy for each card. That alone is a lot of revenue for the government.
More recently, the government is also planning to increase the levy for foreign labour. Yet more earnings for the gevernment. Apparently, this was to discourage hiring of foreign labour; so that employers would tap into the local resources first. I think that is a good idea, except that not very many of our local people are keen to work as housemaids or at the construction sites for the kind of salaries we're paying the foreigners. If employers have to increase the salaries of their workers, then they will inevitably have to pass on the additional cost to the consumers.
Anyway, I can imagine the hundreds of billions of Ringgit the government will be able to save and/or earn from the withdrawal of subsidies and imposing levies. I am curious to know what the government intends to do with all those extra cash, because that's a hell lot of money we're talking about.
It is quite possible that more schools and universities, hospitals and roads will be constructed; poverty eradication programmes will be formulated to educate the hardcore poor; some other developments to create jobs for Malaysians etc. Yes, those are things we all look forward to.
However, a likelier scenario is that we will be building a couple more tallest buildings in the world; send several more tourists into space at RM100M per pax; enter into bridge-construction contracts, only to cancel the plan later, thus incurring a RM100M compensation for the other party; and a whole bunch of mind-boggling wastage and mismanagement you can possibly think of!