The fiscal situation in the country is projected to improve further in the medium term as the government is expected to introduce new taxes that would bring higher revenue, Minister Of Finance Tengku Datuk Seri Zafrul Tengku Abdul Aziz said
He said that the new taxes will point towards improvement in fiscal deficit and the debt-to-GDP ratio. Tengku Zafrul had said this in a session with CGS CIMB in London where he was attending the Invest Malaysia event in London, UK on March 23.
The event brought in international investors as well as representatives from several Malaysian companies. The progamme kicked off with a short presentation on the fiscal situation and economy by the minister, followed by a Q&A session during which we were able to gain further insight into issues that matter.
On the GST, Tengku Zafrul said that the determining factor is the election adding that if the GST is decided post elections, it will likely take a minimum of nine months after the announcement before the tax can take effect, considering the time it takes to table a new law and for the public to readjust. FM is also looking into a GST rate that is higher than the current SST collection, which is around 5% (previous GST was 6%).
On fuel subsidies, The Finance Minister stated that a new mechanism is being considered. While still in the planning stage, the minister hinted that it may take advantage of ‘new technologies’ and it could be in place within the next six months.
He said that similar mechanisms are also being considered for other subsidies, such as for electricity and cooking oil. So far, the impact of higher oil prices is net-zero or slightly positive to the budget, which means that the pressure to adjust is not necessarily on the fiscal front. “The drive to adjust subsidy is more due to opportunity cost so that savings can be spent on a more productive endeavour,” he said
On labour issues, Tengku Zafrul said that foreign workers’ intake has been delayed due to initial efforts to prioritise jobs for local workers and encourage businesses to invest in new technologies.
Nevertheless, he said that the rehiring of foreign workers will now commence, although it will take time due to the bilateral nature of the agreement with partner countries. “On minimum wage, FM believes the 25% increase to RM1,500 per month will not affect the economy, although some assistance is being considered, especially for SMEs,” he said
