The introduction of subsidy rationalisation, coupled with the Good and Services Tax (GST) are productive and progressive measures that have paid off, said Prime Minister Najib Razak.
He said despite the challenging global times and the fall in oil prices, Malaysia has managed to sustain growth of 4.2% last year, “a figure that is envy of many advanced economies”.
Najib said it was a tough decision to introduce GST and subsidy rationalisation.
“Many had advised me against this but we are not a populist government.
“Of course we like to win the election but we will take whatever is necessary to make the right decision. Forbid (and) unpopular, but they are the right decisions,” he said at the launch of the International Organisation of Securities Commission (IOSCO) Asia-Pacific Hub in Kuala Lumpur today.
Najib said the introduction of both measures was not always popular but the government has seen these as appropriate, Bernama reported.
The government introduced a 6% GST on April 1, 2015 to widen the tax base and reduced reliance on oil and gas revenue to 14% from 41% back in 2009.
Najib said India planned to implement GST at the top rate of 23% next month and Saudi Arabia would follow suit in 2018.
He said Malaysia’s Economic Transformation Programme, which was initiated in 2010, has also showed significant results.
“Poverty has been virtually eliminated, 1.8 million jobs were created and the gross national income rose by nearly 50%,” he said.
Najib said because it was crucial to modernise and move up industries’ value chain, Malaysia has invested heavily in enabling infrastructure and innovative technology to scale up production and productivity.
“We knew that in today’s competitive world, our economic growth had to be consistent and sustainable in the long run and had to be capable of maintaining its trajectory through all phases of the business and financial cycles.
“As such, we sought to build resilience into the structure of our economy by diversifying from commodity exports to manufacturing and services as well as strengthening the stability of our institutions,” he said.
Going forward, Najib said, Malaysia economy was set for improved outlook ahead, with stronger trade activity, better export performance and domestic demand being key driving factors.
He said the Malaysian growth story has been and would continue to be supported by a sound capital market which remained as an invaluable source of long-term financing for businesses and development ventures as well as a means for investors to create and preserve their wealth.