KUALA LUMPUR, June 9 (Bernama) — The fall in oil prices could have sent Malaysia into an economic crisis had the Goods and Services Tax (GST) not been imposed, Datuk Seri Najib Tun Razak said.
The prime minister said the GST, which replaced the Sales and Services Tax (SST), has helped broaden the country’s revenue stream to avoid a high reliance on oil revenues.
The GST is a worldwide tax system which is more transparent and systematic than the SST, he said, adding that the change in the tax system was inevitable.
Najib, who is also finance minister, said with the change, Malaysia now has a more diverse revenue stream and strong fundamentals.
“The business community and foreign investors remain optimistic,” he said in his latest posting on the NajibRazak.com blog.
The prime minister said that the GST would not go into bailing out of the government.
“The issue of using GST revenues to bail out failed ventures does not arise,” he said, responding to former prime minister Tun Mahathir Mohamed’s claim that the government is using the GST to bail out unsuccessful government ventures.
Najib said the government would disclose how the GST revenue would be spent in the coming Budget.
“To say that those, who are not in the income tax bracket, are bailing out the government is nothing short of twisting facts,” he said, revealing that the bulk of government assistance goes to this particular group.
“They are even compensated in the form of 1Malaysia People’s Aid (BR1M),” he said.
The government has allocated RM13 billion from 2012 to 2015 for BR1M that had benefited nearly 7.4 million people.
Clarifying the government ventures, Najib said there were many successful ventures undertaken by government linked-companies (GLCs).
“For example, our top 20 GLCs have had a total shareholder return of 12.6 per cent per annum from 2004 to 2015, beating the Kuala Lumpur Composite Index s 12.2 per cent per annum.
“Market capitalisation also grew 3.2 times from RM133.8 billion in 2004 to RM431.1 billion in 2015. Total net profit increased from RM9.9 billion to RM26.2 billion from 2004 to 2015,” he said.
Najib said the government has continuously improved its financial management, including enhancing the efficiency of the GLCs and maximising their returns.
He said the GLCs had made more returns and grown in value more than ever before, with increased transparency, accountability and competitiveness under the GLC Transformation Programme.
“This administration has increased the importance and freedom given to the Auditor-General (AG) to audit the National Finances to report on all leakages,” he said.
The number of issues highlighted by the AG has reduced steadily over the years, he said, adding that, “and I intend to improve on this further.”