Subsidies give false sense of competitiveness

Source: http://www.mmail.com.my/content/49087-subsidies-give-false-sense-competitiveness

BERNAMA
Sunday, September 12th, 2010 01:10:00

KUALA LUMPUR: Relying on subsidy will give a false sense of being competitive, Prime Minister Datuk Seri Najib Tun Razak said today.

"You (private sector) must be competitive because you are more productive, innovative..and because you made the right kind of investment, developed the right kind of talent," he said.

These are the key factors that will enable the nation to compete globally, he said.

"Relying on subsidies gives you a false sense of security because the day of reckoning will come when subsidies will be removed eventually," he said in an interview with CNBC Asia's Martin Soong aired today.

Najib, who is also the finance minister said that the government is focusing on not just eradicating absolute poverty, but looking at the 40 per cent of the population -- the more vulnerable group, the groups that are financially stressed at the end of each month.

"We have to do something for them, for these people. So when we remove subsidies gradually, we have to look in terms of increasing the income level. We have to look in terms of ensuring a wider social safety net, and so forth. So there are measures, which must be put into place," he said.

Acknowledging that there had been a misallocation of resources, he said, for example, people who own luxury cars should not enjoy subsidies. Therefore, there should be a targeted way of reducing subsidies.