Govt needs to reduce subsidies on rich before reintroducing GST - PM

KUALA LUMPUR: Prime Minister Datuk Seri Anwar Ibrahim said the government needs to reduce subsidies on the rich before reintroducing the Goods and Services Tax (GST).

During the interview with Bloomberg's Haslinda Amin at the Milken Institute 10th Annual Asia Summit, Anwar admitted that GST is the most efficient and transparent tax system.

"When do we implement it? It depends on the threshold. When people are living in abject poverty, you have to introduce progressive tax policies, but not a broad base policy that affect the very poor.

"So, you have to give some time, but then do you do nothing? No. You have to broaden the tax base, for sure. But you have first to reduce subsidies to the rich," he said.

He added that subsidy rationalisation is not going to be a popular decision but the government has four years before the next election.

Hence, he said the government has to do the subsidy rationalisation as soon as possible as the subsidy expenses for the country is one of the highest in Asia.

On investment, Malaysia is focusing on clarity in policies to ensure Malaysia is able to attract investments as the nation did successfully in the 90s, said Anwar.

He said with the right policies, clarity of economic policies - Malaysia could do much better than the 90s, supported by good governance.

"We have a good team and we have to accept the fact that we need investments. There must be ease of doing business. There may be clarity of economic policies. There's essentially Madani concepts, but why I call it Madani? It is because of caring and compassion. We have issues in inequality, we have people in the hinterland including Sabah and Sarawak, and some in Peninsular Malaysia. We have to address this issue.

"And with clarity policies, we have been able to attract in the last five-six months from China, the United States and Europe a major investment. The largest from Infineon Technologies, (invest) five billion euros (about RM24.9 billion) into Malaysia. This would be of immense help to boost the confidence," said Anwar.

The government had introduced the Madani Economy which is aimed at boosting the Malaysian economy, National Energy Transition Roadmap (NETR) to achieve the nation's net-zero greenhouse gas (GHG) emissions aspirations as early as 2050 and the New Industrial Master Plan 2030 (NIMP 2030), which aims to revitalise the country's manufacturing sector and increase its value-added turnaround to RM587.5 billion by 2030.

On Tesla's investment, Anwar said Tesla has decided to have its operations headquarters in Malaysia due to be open by end of October or early November this year.

He said there are three local Malaysians companies working with SpaceX, adding that Starlink has something that would benefit Malaysia immensely.

When asked in which sectors investors should invest in Malaysia, Anwar said Malaysia is expected to see a greater increase in digital transformation, energy transformation and renewable energy.

"On investment tax, it has to be attractive for investments... whatever needs to be done, whatever is necessary to ensure that Malaysia remains as an attractive competitive destination for investments," he added.

-- BERNAMA