KUALA LUMPUR – Better financial management in 2023 will be able to restore business and investment sentiments in Malaysia, which will positively impact its citizens in about one year, said Economy Minister Mohd Rafizi Ramli.
He said improved financial management would also be able to strengthen the nation’s fiscal space little by little.
“When it (financial management) is carried out more prudently, Insya-Allah, in 2024 we will have more room to spend,” he said in an interview on Ayuh Malaysia Show themed Malaysian Economy: Between Perception and Reality yesterday.
Rafizi said Malaysia’s economic standing is seen as more resilient compared with its fiscal position.
“However, the people’s wellbeing and government’s capability is not placed on economic growth solely if looked at from different angles,” he said.
Apart from that, the minister said that the government’s cash flow position depends on the amount of tax it collects and the types of income that flows into its coffers.
“The economy grows but not all of it translate into government revenue, of which the biggest component is income tax whether from individuals or companies. If the economy expands but individual income does not rise and companies are not profitable, then there’s no increase in tax (collection) for the government,” he said.
According to Rafizi, compared with other Asean countries, Malaysia is placed third from bottom in the percentage of income tax to the government compared with the size of the economy at about 11.4%, against the Asean average of 15%, while for advanced countries the percentage is higher at around 25% to 30%.
“This is one of our structural problems and it is the government’s responsibility to find ways to address it in the medium and long-term and ensure that salary growth can match the increase in goods prices,” he said.
Nevertheless, he said if the country’s finances could be managed well by reducing leakages, corruption and others, then the country will not be in a desperate situation.
“This means, with revenue that we have of more or less RM290 billion each year, if this is managed properly and expenditure is managed well by prioritising spending, we can sustain ourselves.”
Prime Minister Datuk Seri Anwar Ibrahim who is also finance minister will table the revised Budget 2023 in the Dewan Rakyat on February 24. – Bernama, January 14, 2023
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