Use falling prices to reform subsidy plan, govt advised

PETALING JAYA: Malaysia must use the window of opportunity presented by downward price trends to pursue reforms to its far-reaching subsidy programmes, according to the World Bank.

Its lead economist for Malaysia Apurva Sanghi said measures must be taken simultaneously to widen the governments revenue base while reducing expenditure.

“Governments naturally fear the inflationary effects of switching from blanket to targeted subsidies. However, the answer is not to pull the plug on it. Instead it is to pursue it in a gradual manner, with safeguards in place to ensure it does not give rise to inflation,” Apurva said at a briefing on the Malaysian economy today.