Most of us welcome government subsidies, given how they appear to reduce the costs of fuel, electricity and everyday food items at no cost to ourselves. Indeed, we tend to take them for granted, operating under the assumption that subsidies are ‘free’.

Contrary to the popular perception, subsidies are, in actuality, a form of government spending, and a costly one at that, with the subsidy bill expected to hit RM33 billion in 2012. This is an immense sum, especially if compared to 2008’s subsidy bill, which was a mere RM10 billion in comparison.

Subsidies aren’t quite effectively fulfilling their original purpose of aiding public welfare either. Instead of fostering a more competitive business environment, they have caused independent power producers (IPPs) to grow increasingly inefficient while raking in high profits. The blanket subsidies benefit both the rich and the poor, despite the latter needing it more and the former not at all. Subsidies also encourage a culture of wastage and over-consumption – why bother driving a fuel-efficient car when petrol is cheap?

Government-subsidised thrift stores such as the Kedai Rakyat 1 Malaysia (KR1M) are also working against the intent to help the financially needy. The very low costs of items sold in these stores, made possible via the subsidies, cause ‘kedai runcits’ selling similar stock to lose business, reducing their earnings. Owners and staff from these stores will then be forced to close their business or lower their expenses, resulting in them shopping at KR1M to save costs. More KR1M stores will be established to deal with the increased demand for their goods, causing more self-owned stores to struggle and falter, starting the cycle all over again.

In the long run, subsidies are going to ruin Malaysia, rather than aid it. Our Prime Minister has urged us to kick our addictions to subsidies, but as long as the government continues providing subsidies in their current form, our dependency on them isn’t going to be easily fixed. How then should subsidies be provided? And how does Pakatan Rakyat handle balancing their social welfare programmes with prudent management? UMNO-Nomics lays out the facts about subsidies, accompanied with cartoons designed to amuse even as they drive each point home.

Written simply by Teh Chi-Chang, illustrated creatively by Johnny Ong and endorsed by personalities from Nurul Izzah Anwar to Kee Thuan Chye and Zunar, this book is a steal at just RM35 for delivery to your (Malaysian) door-step. Email admin@refsa.org or visit http://shop.refsa.org/ to order your copy now!