Wednesday, 23 October 2013 10:00
Minister in the Prime Minister’s Department Datuk Seri Abdul Wahid Omar says the government has taken steps in the right direction to ensure the country’s fiscal outlook will improve.
Abdul Wahid, speaking in Kuala Lumpur yesterday, said these steps included rationalising government subsidies to improve the balance of payment and keep the budget deficit to 3% by 2015.
He said Budget 2014, which will be tabled by the prime minister on Friday, will contain measures and fiscal policies which will assure investors and the rating agencies.
He said the government has also stepped in with measures designed to curb the national household debt levels. “The upcoming budget is an anticipated one. Many economists, analysts and the corporate sector are expecting important measures to be announced,” he said at the World Capital Markets Symposium yesterday.
Some of the concerns on Malaysia’s long-term outlook were raised in July after Fitch Ratings cut the country’s credit outlook to negative after taking into consideration rising debt levels and lacking budgetary reforms.
Malaysia has a long-term foreign-currency denominated rating of A- at Fitch, and has had annual budget deficits every year starting 1998.
Following the announcement, stocks fell the most in seven weeks. The ringgit and bonds also suffered.
Commenting on the Goods and Services Tax (GST) which is widely anticipated to be mentioned in the Budget 2014, Abdul Wahid said it will help with efficient tax collection.
“If GST comes into force, business entities will have to register themselves with relevant tax authorities. That will improve tax collections,” he said.
Abdul Wahid would not elaborate on speculation on the rate at which the GST could be introduced but it is expected to be between 4% and 6%.
The GST will replace the sales and services tax which is currently being collected at between 5% and 10%.
Even if the GST is introduced in the next budget presentation, it would come in force 14 months later, the Finance Ministry had previously announced, to set up the collection mechanism and provide a grace period for businesses and consumers.