ARKIB : 13/11/2010
TOKYO Nov 12 — Fighting budget deficit will be the top priority for the Malaysian government which is proposing several policy changes to resolve it, said Deputy Prime Minister Tan Sri Muhyiddin Yassin today.
For instance, the proposed introduction of the Goods and Services Tax (GST) was a significant move as Malaysia was one of the last Asian economies without a comprehensive consumption tax.
"Although the GST has been postponed, we will continue educating the public on the subject and we will implement it in due course,” he said when opening the “Invest Malaysia 2010” seminar here.
Muhyiddin said the government would continue to manage its deficit judiciously by keeping it at 5.4 per cent of the Gross Domestic Product (GDP) for the 2011 Budget compared with 5.6 per cent in the 2010 Budget.
Limiting the scope of the government, he said, it was considering ways to further reduce the subsidy bill, which in recent years has been equivalent to the budget deficit.
“We acknowledge that as a result, fuel and gas prices have to go up and the private sector will have to adjust to fewer government handouts. But while the timing can be discussed, we know that change is inevitable,” he said.
He said addressing the fiscal position was probably the most politically challenging item on the government”s reform agenda.
"But it is worth keeping in mind that the robust economic recovery and higher crude oil prices will improve the government”s revenue collection in the coming years,” he said.
In his address to the seminar participants comprising fund managers and market players, Muhyiddin touched on the vibrancy of the Malaysian capital market which he said was expected to continue, fuelled by increased activities in the areas of mergers and acquisitions and initial public offerings (IPOs).
The Deputy Prime Minister said Malaysia would continue to address issues of concern to investors such as free float and size of companies while at the same time continue to internationalise the market.
On privatisation, Muhyiddin said a further round would attract additional inbound portfolio flows by increasing the size and listing selection of Bursa Malaysia.
"We will encourage the entrance of larger cap companies to the exchange such as Maxis, which was re-listed late last year with a market capitalisation of close to US$12 billion,” he added. — BERNAMA
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