PAS warns that call to nationalize essential services will burden government

Two economists have rejected the proposal by a PAS MP to nationalize the production and supply of essential items such as cooking oil and rice, emphasizing that such sectors should remain in the realm of the free market. Yeah Kim Leng from Sunway University and Barjoyai Bardai from the Malaysian University of Science and Technology (MUST) argued that nationalization could burden the government financially and place direct responsibility on it to produce these vital goods.

Yeah pointed out that the nationalization of food sectors should be reserved for emergencies to prevent famines or malnutrition among the poorest segments of society. He noted that in well-functioning market economies with stable pricing, government intervention is unlikely to lower prices significantly. Moreover, governmental takeovers could disrupt production and supply chains, especially if driven by political rather than economic motives, he explained.

The lack of industry expertise and potential inefficiencies within governments were highlighted by Yeah, who cautioned that monopolizing industries could lead to lapses in governance. Barjoyai concurred, stating that since Putrajaya already subsidizes rice and cooking oil, there is no need for the government to control their production. Instead, the focus should be on ensuring a stable supply and controlling prices to maintain affordability, he suggested.

The economists responded to Permatang Pauh MP Fawwaz Jan’s call for nationalizing the production and supply of these items to increase government revenue and keep prices low. Fawwaz made the proposal at the recent PAS muktamar, arguing that conglomerates have dominated the market for essential items for too long and that nationalization could reduce reliance on corporate taxes.

Barjoyai dismissed the notion that nationalization would enhance federal revenue, arguing that the government could achieve this by increasing tax rates instead. He recommended that if the government were to control any industry, it should target those with higher profit margins, such as telecommunications. Yeah emphasized the importance of leaving the production of rice and cooking oil in the hands of multiple private sector players to ensure competition, adequate supply, and affordable prices.

In conclusion, the economists reiterated that the government’s role should primarily focus on maintaining stability and affordability in the supply of white rice and cooking oil. Rather than nationalizing these sectors, the emphasis should be on ensuring a competitive market landscape while simultaneously lifting household incomes, especially among the B40 group, to withstand fluctuations in food prices without straining government finances.