Sacrifice required to strengthen the nation
ALTHOUGH Dr Mara Warwick of the World Bank had commended Malaysia’s quality growth and its ability to achieve a high-income economy, the newly-elected government should remain steadfast with its austerity measures. The journey ahead in bringing the national debt down to an acceptable level is not only tough but also tedious.
As a cautious Malaysian citizen, I have expressed my support for the implementation of the goods and services tax (GST) on many occasions in the media. GST is not only an effective tax regime, it is also a transparent and fair system to collect revenue for the government. The more a person consumes, the more he has to pay. Hence, the system encourages frugality, thus reducing wastage.
Since it was an election pledge to remove GST, which will be replaced by the sales and services tax (SST) from Sept 1 after a twomonth tax holiday, I would caution the new government to tread carefully. Although it should be able to cope with the shortfall of RM20bil by reinstating SST over the next couple of years, in the long run the compounded shortfall would only worsen the national debt.
I urge the government to revert to GST but rename it value added tax (VAT) and impose a lower rate, say 4% instead of 6%, in 2020. We shouldn’t rely too much on crude oil although the prices have been on the rise lately. Crude oil is a depleting resource and the price is just too volatile to depend on as a source of income to run a country efficiently.
With other subsidies to roll out in compliance with the election manifesto in the coming weeks, the new government has to find ways and means to manage the economy efficiently.
Our country has been running on a deficit budget for far too long. If we do not conceive a clear action plan soon to arrest this deficit, we may become a victim of overspending like Greece. After enduring eight years of austerity, Greece’s hard times aren’t over yet.
I was perturbed by Prime Minister Tun Dr Mahathir Mohamad’s proposal to launch a Malaysia-Indonesia car project for the Asean market. Haven’t we learnt a lesson from Proton’s difficulties yet? As a 93-year-old veteran in government affairs, Dr Mahathir should focus all his efforts on rebuilding the country and forget the automobile industry. Geely only acquired 49.9% of Proton’s equity so the controlling interest is still retained by DRB-Hicom.
PATRICK TEH Ipoh