Govt to spend on development, keep debt manageable

KUALA LUMPUR (Sept 6, 2012): The government will have to continue spending on development while at the same time keeping national debt at a manageable level, says Deputy Finance Minister Datuk Donald Lim Siang Chai.

He said on Thursday a significant development phase was taking place currently involving several billion ringgit worth of projects such as the Mass Rapid Transit (MRT) line. As at December 2011, the ratio of national debt to the gross domestic product (GDP) reached 51.8 per cent.

"Of course the debt figure is quite high but we have to spend money on infrastructure, healthcare and so on.

"We want to cut down the figure, which in most developed nations is 100 per cent while in the United States it is 200 per cent," he told reporters after delivering a keynote address at the "Forum on Private Retirement Scheme in Malaysia."

The forum was organised by the Malaysian Financial Planning Council and Financial Planning Association of Malaysia.

Lim said the government would work hard not to exceed the debt ceiling of 55 per cent of the country's GDP which was increased from 45 per cent in July 2009.

Several global rating agencies, including Standard & Poor's and Fitch Ratings, recently raised concerns about the strains on the country's credit profile.

Lim also said the country's dependence on the oil and gas (O&G) sector would eventually be lower going forward as the government had beefed up efforts to broaden its revenue base.

Lim said currently, the O&G sector supplies about 35 per cent of government revenue, followed by the commodity sector (palm oil and rubber), manufacturing, retail market and tourism.

"The dependence level in the 1990s was as high as 50 per cent and we have come down now with the expected increase in contribution from the services sector given the efforts put in place to boost the industry," he explained.

On the Goods and Sales Tax (GST) Bill, Lim said the second reading will be tabled in Parliament as soon as the feedback from the business community is received. "Currently, we are holding an awareness campaign and more people are acknowledging it," he said. - Bernama