KUALA LUMPUR: The government's announcement to rationalise fuel subsidies is timely after the success of the Central Database Hub (Padu) registrations.
Economist Professor Dr Geoffrey Williams said that given the success of a high registration rate on Padu, it would give a clear indication of who is rightfully entitled to government subsidies.
"I think the biggest challenge is to make the commitment, and, you know, the Prime Minister did that from day one. And once you've made that commitment, you really have to deliver on it.
"The introduction of the Padu system, despite what the critics said about it at the time, has been very successful. It has been hugely successful, actually. The number of people who have registered probably captures everybody who is likely to be a recipient of welfare and subsidy support," he told the New Straits Times' podcast, Beyond the Headlines.
The Padu registrations, Geoffrey added, appear to have successfully covered a sufficiently large group of people, based on feedback from the Economy Ministry that administers Padu.
The time between Padu's launch and the subsidy rationalisation, he said, serves as part of a good transition.
These stages allow the public to understand how subsidies work, and that it is not an individual gain.
Instead, he said, it is businesses that stand to gain from subsidies as they can profit off more sales and demand.
"I think people have to be realistic about this and to understand that subsidies do not go to members of the general public. They don't. They do not receive the subsidy personally. That's just it. You do not receive the subsidy personally."
"The subsidy goes to a company. There is the market price, and then there is the consumer price. The difference between that is the subsidy; the subsidy goes to the company.
However, when changes occur, there will be pushback from these stakeholders if it happens too quickly.
"That means that a very, very large number of people are making money out of the subsidy business. Very large numbers of people are making very, very great amounts of money out of the subsidy business. And when you have this, tens of billions of ringgit, where in terms of the total subsidy budget, not including the illicit (leakages and abuse of subsidies) activity as well, then you have to realise that there are a lot of people who are going to push back if you are going to try to change that quickly, because they are going to lose a lot of money very quickly and they are not going to allow that to happen.
"So the government has to deal with that as a very pragmatic challenge. It's all very well for economists to say this is how it's done in theory, or even for technologists to say, well, here's the app, here's the card; that's all relatively straightforward.
"But when you see some guy who says, no, hold on, I'm going to lose millions because this system has changed, it's the change management process. If they're going to lose millions, they're going to push back, they're going to stop it, they're going to sabotage it for sure. And that's why it has to be done in stages because of the simple pragmatics of the. Well, the reality, the real politics of it."
On Tuesday, Prime Minister Datuk Seri Anwar Ibrahim announced that the government will implement targeted subsidies on fuel starting with diesel.
Anwar, however, did not indicate the implementation date for the subsidy rationalisation.
He said the subsidy rationalisation exercise would only apply to users in peninsula Malaysia first and not those in Sabah and Sarawak for the time being.
He emphasised the government's commitment to preserving the people's welfare amidst rising living costs.