Tengku Zafrul: Windfall tax may send wrong signal

KUALA LUMPUR: The implementation of a windfall tax on glove companies that have benefited from the pandemic is a non-consistent policy which will a send a wrong signal to investors, according to Finance Minister Tengku Datuk Seri Zafrul Aziz.

Should the windfall tax be imposed, it would make investors think twice before investing in the country, or opt to invest in neighbouring countries like Vietnam and Singapore, he said.

“You can (impose such tax), but you might send a wrong signal, especially for an open economy like Malaysia,” he told Bernama after appearing as a guest on Bernama TV’S “Ruang Bicara” programme titled “Budget 2021 the Rakyat’s Victory” here.

Tengku Zafrul said policies have to be for the long-term and not based on short-term gains.

Former Youth and Sports Minister Syed Saddiq Abdul Rahman has been urging the government to impose a windfall tax on glove makers who he claimed had made huge profits amid the Covid-19 pandemic.

Meanwhile, Tengku Zafrul expressed optimism that Malaysia’s 2021 gross domestic product (GDP) would grow within the range of 6.5% to 7.5% as projected by the government.

He said the 2021 GDP forecast is based on various assumptions, such as the pick up in economic demand, as well as the Covid-19 vaccine that is widely expected to be available in the first quarter of 2021 which would have a positive spillover effect on Malaysia.

“I am optimistic that the GDP

“I am optimistic that the GDP for 2021 will fall within 6.5% to 7.5%.” Tengku Datuk Seri Zafrul Aziz

for 2021 will fall within 6.5% to 7.5%, and I am not alone, this is not my projection, but the projection of the Finance Ministry and Bank Negara Malaysia.

“And our forecast is in line with those made by the International Monetary Fund, World Bank, Asian Development Bank and other rating agencies, of 6% to 8%,” he said.

On GDP projection for Q4 2020, Tengku Zafrul, admitted that there would be an adverse impact, especially on the retail and tourism sectors following the reinstatement of the conditional movement control order (CMCO) in Kuala Lumpur and Selangor since mid-october.

They contributed around 40% of the country’s total GDP.

“But it will not be as bad as the MCO in March where the daily impact cost about Rm2bil to Rm2.4bil a day, while during the CMCO, the daily impact is about Rm300mil as economic activities, manufacturing and exports still operate as usual,” he said.