THE government is considering removing licenses for companies in certain sectors and addressing monopolistic policies, according to economists.
Prof Dr Geoffrey Williams has highlighted that exclusive licenses provided by the government have led to monopolies in several key sectors. Removing these licenses would open up competition and help lower prices and reduce the cost of living, he argued.
Prof Williams specifically pointed to monopolies held by companies such as Bernas, Pharmaniaga Bhd and the Malaysian Medical Council (MMC).
“Monopolies on consumer products such as the Bernas rice monopoly, are created by policy. There is no real economic reason why many companies could not supply rice and hence, it should be removed,” a local news portal quoted him as saying.
He further noted that removing Pharmaniaga’s monopoly could lower medicine prices, while ending the MMC monopoly would allow any doctor with an accredited degree to practice, addressing the current contract doctor crisis and reducing private medical costs.
Nusantara Academy of Strategic Research senior fellow Dr Azmi Hassan suggested that the government should also address monopolies in toll payments by Touch ‘n Go and the e-hailing service provided by Grab.
“These two critical issues need to be addressed by introducing new policies to create more competition.”
Meanwhile, Bank Muamalat chief economist Dr Mohd Afzanizam Abdul Rashid pointed out the importance of removing monopolistic policies to foster a fair, transparent, and efficient market for goods and services, which would help establish the right price discovery mechanism.
Regarding the 2025 budget, Dr Afzanizam expects allocations for direct cash transfer programmes as the government rationalises subsidies.
“This would allow the government to save and use some of the savings for cash aid programmes such as Sumbangan Tunai Rahmah (STR), Sumbangan Asas Rahmah (Sara) and early school assistance, among others,” he added.
Moreover, Dr Azmi anticipates an increase in STR given the nation’s positive economic trajectory.
“The current cash aid via STR is still not enough because of the high cost of living and most probably some businesses are taking advantage in increasing the cost of products and services after the diesel subsidy was introduced,” he explained.
“The economic growth above 5.0% might be translated into a higher amount of STR and also receivers of the cash aid could be expanded.”
Furthermore, Prof Williams also noted that savings from subsidy rationalisation including diesel and utilities could provide the government with more room to deliver a better budget.
He emphasised the need to fund a new RM10 bil commitment for higher civil service salaries.
To raise more revenue, Prof Williams suggested the implementation of an e-payment tax (EPT).
Based on his estimation of a 1.0% EPT rate, he is of the view that it could raise RM13.9 bil, which would be enough to eliminate individual income tax for everyone below the T20 threshold and still leave RM7.5 bil for additional spending on health, education, and social protection. – Aug 7, 2024
