KUALA LUMPUR: Economy Minister Rafizi Ramli today said the government will initiate communications on the methods and standards for subsidy rationalisation, as well as clarify the effects on various segments of society in the coming weeks.
He said this during his address at the launch of the 29th Malaysia Economic Monitor: Bending Bamboo Shoots: Strengthening Foundation Skills.
Rafizi said with 52.6 per cent of Malaysians aged 18 and above registered with the Central Database Hub (PADU), it has sufficient bandwidth to finally implement subsidy rationalisation and transition away from the regressive model of blanket subsidies.
"With this level of necessary, granular data, we can minimise both exclusion and inclusion errors, and ensure an equitable distribution of subsidies to those that need them most," he noted.
Rafizi said a successful subsidy rationalisation and redirection of the savings into social assistance can double poverty reduction and still generate fiscal savings, according to World Bank estimates.
He added that by embarking on the rare fiscal reform opportunity, the government can begin addressing the challenge of the increasing federal debt, which currently amounts to 64.3 percent of the gross domestic product (GDP).
"This is especially pertinent in this high interest rate environment, where our debt service charges are increasing," he added.
Rafizi said while consolidating the fiscal position, there is a pressing need to explore new avenues for growth.
"That is why the government's launch of KL20 this past week represents a diverging path. Alongside the launch of the KL20 Action Paper, we rolled out a series of holistic reforms, that will position Kuala Lumpur as the next haven for venture capitals (VCs) and startup founders," he continued.
Rafizi added that the vindication of the reforms lie in the announcements of several deals. These include the RM3 billion ASEAN Investment Initiative, the presence of 12 international VCs opening new offices here, and Southeast Asia's largest IC design park backed by companies like Arm and Phison.