Talk about subsidies so people will value limited resources

National 1 minute, 43 seconds


THE debate on subsidies need to happen in Brunei, Paulius Kuncinas, regional editor of Asia for Oxford Business Group, said in light of recent developments related to fuel subsidies in neighbouring countries.

In an interview with The Brunei Times, Kuncinas said market pricing of goods that are currently subsidised will encourage self-reliance in the public and discourage wastefulness.

He explained that if subsidies were removed and such goods were priced at market rates, then people would start appreciating the value of limited resources more and start saving.

“In Indonesia and Malaysia, we can see that there is a rationalisation of subsidies,” he said. Malaysia recently reformed fuel subsidies while Indonesia’s new president announced a 30 per cent hike on subsidised fuel prices in early November.

Brunei gives subsidies on oil and gas products, including fuel, along with other essentials such as rice and sugar.

“It is not feasible to maintain high levels of subsidies,” he said, noting that this needs to be adjusted so people will become more self-reliant or appreciate limited resources like fuel or electricity.

He said it is not just about whether the country can afford to continue providing subsidises.

“It is also about current generation and the future generation,” he said. “By underpricing goods, the biggest problem is that it encourages wastefulness. People leave the air conditioning running or the car running when doing errands.

"Maybe the country can afford it, but then you are actually using up resources that is going to be much more scarce in the future. This is depriving it from the next generation, your children or grandchildren and that is how you have to think about it,” he said.

“This (removing subsidies) has to happen. The question is how fast and how you protect the vulnerable, because of course you don’t want to force people from low-income households into poverty. So I think there needs to be a healthy debate, and a strong understanding that this is the future, that ultimately resources have to be priced according to the market.”

The Brunei Times