KUALA LUMPUR, Dec 11 — Putrajaya must do better to help those most impacted by the spike in living costs due to the slash in subsidies and the looming power tariff hike, outgoing MCA president Datuk Seri Dr Chua Soi Lek said today.

The former health minister said his party understands the need to cut subsidies as a solution to the structural problems in Malaysia’s economy but the move must be accompanied by measures to help the poor and those operating small and medium enterprises (SMEs) cope with the rising inflation.

Dr Chua pointed out that SMEs, which are already struggling with higher production costs due to fuel subsidy cuts and the minimum wage rule, would be the most hurt by the power tariff hike that will take place on January 1.

“We support the subsidy rationalisation programme so that only the targeted groups would receive subsidies.

“We notice that all these are necessary, but the government must ensure that affected SMEs can weather the hike. They will be ones most badly affected,” Dr Chua told a press conference at the party’s headquarters here.

The MCA president than noted that subsidy cuts on fuel and sugar, and concerns over a further spike in inflation rates once the Goods and Services Tax (GST) is implemented, have been causing anxiety among those in the lower- to middle-income group.

He said merely giving cash rebates or increasing the amount of BR1M, a one-off cash aid for the lower-income bracket, was insufficient to deal with the problem.

“The government must help the lower-income group and industries affected by the move. Just giving out BR1M is not enough,” Dr Chua said.

Prime Minister Datuk Seri Najib Razak, when unveiling Budget 2014 in October, had announced an increase of the 1 Malaysia People’s Aid (BR1M) to RM650 from the previous RM500 for households with an income of RM3,000, while for unmarried individuals aged 21 and above and with a monthly income not exceeding RM2,000, the amount will be increased from RM250 to RM300.

In addition to that, and for the first time, a BR1M assistance of RM450 would be extended to households with a monthly income of between RM3,000 and RM4,000.

“The assistance is given to alleviate the rising cost of living borne by the lower middle-income group,” Najib said in his Budget speech.

Although the move was aimed at helping the lower-income cope with subsidy cuts, critics say the amount is insufficient.

Malaysia faced its steepest inflation rate hike in 20 months in September, mainly caused by the fuel subsidy cut in September which increased pump price by 20 sen per litre, Maybank Investment Bank (IB) recently.

The research house also predicted that the inflation rate will likely accelerate next year compared to 2013, as a result of the sugar subsidy cut announced in Budget 2014.

In September, inflation was up by 2.6 per cent year-on-year, its highest so far this year.

The opposition claimed its shadow budget could consolidate the government’s fiscal position without introducing those cuts, but by cutting wastage.

Dr Chua echoed the view and said Putrajaya must work towards reducing wastage amid efforts to restructure the economy.