Explainer: Turning around the Malaysian economy

Free Malaysia Today

Higher revenue from taxation and savings from subsidy rationalisation will allow the country to attain its development goals while providing better assistance to poorer Malaysians.   Read More: https://www.freemalaysiatoday.com/category/nation/2024/06/24/turning-around-the-malaysian-economy/   Free Malaysia Today is an independent, bi-lingual news portal with a focus on Malaysian current affairs.    Subscribe to our channel - http://bit.ly/2Qo08ry   ------------------------------------------------------------------------------------------------------------------------------------------------------  Check us out at https://www.freemalaysiatoday.com  Follow FMT on Facebook: https://bit.ly/49JJoo5  Follow FMT on Dailymotion: https://bit.ly/2WGITHM  Follow FMT on X: https://bit.ly/48zARSW  Follow FMT on Instagram: https://bit.ly/48Cq76h  Follow FMT on TikTok : https://bit.ly/3uKuQFp  Follow FMT Berita on TikTok: https://bit.ly/48vpnQG  Follow FMT Telegram - https://bit.ly/42VyzMX  Follow FMT LinkedIn - https://bit.ly/42YytEb  Follow FMT Lifestyle on Instagram: https://bit.ly/42WrsUj  Follow FMT on WhatsApp: https://bit.ly/49GMbxW  ------------------------------------------------------------------------------------------------------------------------------------------------------  Download FMT News App:  Google Play – http://bit.ly/2YSuV46  App Store – https://apple.co/2HNH7gZ  Huawei AppGallery - https://bit.ly/2D2OpNP   #FMTBusiness #PADU #Economy

Transcript

00:00Running government is an expensive affair.

00:31For 2024, the Malaysian government has allocated more than three quarters

00:35of its RM393.8 billion budget to cover operating expenditure, or OPEX.

00:41At RM303.8 billion, the OPEX for this year can already be described as a staggering sum,

00:48but it is one that we can only expect to rise over time.

00:51But why is Malaysia's OPEX so high?

00:54It covers a wide array of expenses, including wages for civil servants,

00:58pensions for retirees, subsidies, the upkeep of government buildings

01:02and interest payments on our national debt.

01:05That debt now stands at an astonishing RM1.5 trillion.

01:10The reality is that after servicing our debt and meeting OPEX payments,

01:14Malaysia just does not have much money left to meet its development needs.

01:19That is why the government is coming up with ways to fill its coffers.

01:22Recently, the government actually increased service tax from 6% to 8%.

01:27But that's not all.

01:28There are other new taxes, such as the low-value goods tax and capital gains tax,

01:33which both came into effect on January 1st this year,

01:36and an impending high-value goods tax.

01:39However, if taxes are increased while our incomes remain stagnant,

01:43it will only worsen our financial situation.

01:46That's why it is crucial that the incomes of Malaysians rise in tandem with any tax increases.

01:54The reality is that the per capita income levels in the country have more or less stagnated,

01:59hovering around US$11,000 per year in the last 10 years.

02:16To help Malaysians escape the low-to-mid-wage trap,

02:18the country needs to seriously increase productivity.

02:21So the government needs to create high-skilled and better-paying jobs.

02:25Up till this point, you will notice that the government would have increased the country's revenue from the additional taxes.

02:31It would also obtain large savings from rationalising subsidies involving fuel, sugar, chicken and electricity.

02:38It would also curb smuggling.

02:40Now, these funds must go to those who are truly in need.

02:44And that is where the Central Database Hub, more popularly known as PADU, comes into the picture.

02:51To develop and create a database that will be the main reference source for all government agencies

03:00in making the right decisions on data management,

03:04as well as to improve the governance of government services.

03:10It is designed to ensure that, moving forward, all subsidies reach the deserving recipients.

03:16This is of particular significance given that Malaysia is presently grappling with a RM52 billion subsidy bill,

03:23the bulk of which is presently enjoyed by those in the higher-income brackets.

03:28PADU doesn't just focus on individual income.

03:31It also considers the financial obligations of an entire household.

03:36Even if a person is categorised in the mid-to-higher-income group,

03:40if he or she is supporting a large family with significant expenses,

03:44PADU takes that into account when determining who qualifies for subsidies.

03:49Now that the government manages to fill in the coffers,

03:52the next step is to ensure that it is safeguarded from leakages.

03:56That is why it is important to eradicate corruption and plug fiscal leakages in the system

04:02to prevent public funds from going to waste.

04:05In summary, the government has taken a number of steps aimed at turning the country's fiscal trajectory around

04:11and enhancing our finances for development purposes.

04:15First, they're boosting revenue by implementing additional taxes.

04:19However, this must go hand-in-hand with increased productivity and higher wages.

04:25Secondly, they're rationalising subsidies to maximise savings.

04:30Third, they're fighting corruption vigorously to ensure that these funds are not wasted

04:34but are instead directed to those who truly need them.

04:38All of these to turn around the economy of the country,

04:41to pair our debt and gear up towards becoming a high-income country.

04:46These measures will undoubtedly be tough,

04:49so will the people back the government's turnaround initiatives?

04:53Is there enough political will to push these changes through?

04:57What we know for sure is that significant action is necessary before it's too late.

05:02Hannah Khan, FMT Business

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