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10% cut for base salaries of Malaysian cabinet as it seeks to reduce national debt

Prime Minister Mahathir Mohamad has announced on Wednesday (23 May) that Malaysia will cut the salaries of its Cabinet ministers by 10 per cent with immediate effect as the country seeks to reduce its debt, which is in excess of RM1 trillion (SGD$337 billion) – about 65 per cent of the nation’s Gross Domestic Product (GDP).

Speaking at a press conference after chairing his first Cabinet meeting at Putrajaya, Dr Mahathir said, “This proves that we are concerned over the government’s financial issues. This is a habit of mine. When I first became prime minister (in 1981), the first thing I did was to cut the salaries of ministers and senior civil servants.”

“As you know, the senior civil servants are better paid than the ministers, it is up to them if they feel that they want to contribute towards lessening the cost of running this country. They can do so, but we are not forcing them,” he added.

Commenting on the pay cuts for the minister, Dr Mahathir said the reduction will be on their base salaries. A federal minister’s monthly basic salary is about RM14,907.20, while the prime minister and deputy prime minister’s monthly basic salaries are RM22,826.65 and RM18,168.15, respectively.

Under the previous government led by the Barisan Nasional coalition, former prime minister Najib had promised civil servants a salary increase starting from 1 July.

Dr Mahathir stated that his government was looking into the matter, saying, “That is a promise made by the opposition now. They have not won the election; we are not bound to their promises.  Nevertheless, we will look at it in a very positive way. Where they deserve to be given some extra allowance, we will do so.”

Dr Mahathir also stated that the number of civil servants will also be reduced so as to cut government spending.

He said that the government would cease the recruitment of political appointees and re-engage those in critical posts and with low salaries, adding that it was unnecessary to have political appointees as they were appointed merely to accommodate the supporters of the previous government.

He explained that about 17,000 contract officers were political appointees and some among them had become permanent staff, saying, “Those with low income, we will engage them but first we will terminate (their service),” giving an assurance that low income employees would not be victimised.

The new prime minister then noted that some projects committed to by the old government may be dropped. Regarding the some projects, such as the HSR and the RM55 billion East Coast Rail Link, he said the government will decide “very soon” on whether to continue with the project, labelling some of these as “wasteful” and “unnecessary”.

He also noted that agencies, including the regulator Land Public Transport Commission and the Special Affairs Department, which is tasked with advising the state on maintaining public perception, will be dissolved.

“Most of these institutions founded which were not part of government, which were supposed to advise government, all these things will be disbanded. We don’t need their intelligence. I think we are quite intelligent ourselves,” he added.

Dr Mahathir also said that the Goods and Service Tax (GST) will be removed no later than 1 June as previously announced.

On transportation, the new prime minister said that petrol prices at the pump will remain the same even though global crude oil prices have reached more than US$70 per barrel.

Following his announcement, the price for RON95 petrol remained unchanged at RM2.20 per litre, with RON97 at RM2.47 per litre and diesel at RM2.18 per litre.

The fuel prices have remained unchanged for more than a month.

Dr Mahathir noted that Pakatan Harapan had promised to stabilise fuel prices and reintroduce fuel subsidies to targeted groups, saying, “Our policy is not to have weekly changes in the price according to the market.”

He then stated that his first Cabinet meeting went well, saying, “I love for them (the ministers) to speak as I want to show them I’m not a dictator.”