Move to save govt $363 million yearly, but analysts warn of psychological effect on consumers as living costs rise

Move to save govt $363 million yearly, but analysts warn of psychological effect on consumers as living costs rise

- Hazlin Hassan

KUALA LUMPUR - The Malaysian government will fully remove subsidies for chicken eggs from August, a move that is expected to save it RM1.2 billion (S$363 million) annually, but will hurt consumers already grappling with rising costs of living, analysts say.

Egg producers now receive a subsidy of 10 sen an egg, which costs the government about RM100 million monthly, or RM1.2 billion a year. This payment will be reduced in phases, beginning with a 50 per cent, or five sen, reduction from May 1, followed by the complete removal of subsidies and price controls from Aug 1.

Malaysia now imposes ceiling prices for eggs, ranging from 38 sen to 42 sen each, depending on their grade and quality. Analysts estimate that prices will rise by about three sen an egg when subsidies and price controls are removed.

The Agriculture and Food Security Ministry said the decision was made after careful consideration of market stability.

"This decision was made after taking into account the industry's commitment to ensuring sufficient and stable egg production, as production costs have stabilised," it said in a statement on April 30.

"This was evident during the recent Hari Raya Aidilfitri festive season, where supply remained sufficient and prices were competitive."

The ministry added that a special egg grade will be made available at a reasonable cost, without giving details.