KUALA LUMPUR – Malaysia needs to relook at its existing taxation system in order to have a more comprehensive and equitable system, said former Bank Negara Malaysia (BNM) governor Tan Sri Muhammad Ibrahim.
An equitable tax system, he said, should involve value-added tax and should not become a political issue for the sake of better economic growth.
Ibrahim added that this was to ensure Malaysia has the revenue options and refrain from entering into a debt trap over the long run although the country’s debt level is still relatively lower, about 50% to 60%, compared to Japan and some other countries with over 100% debt level.
He explained that the implication of the debt trap will not only slow down economic growth but also affect the financial market such as the equity and bond markets, which would lead to investors having less confidence in Malaysia.
“As of now, about 30% of the economy does not pay tax because of the nature of the tax system. This includes a retired person like me or others who could still afford to spend and should be contributing their part as they still enjoy good roads, airports and schools,” he said at the 12th Malaysia-China Chamber Entrepreneurs Conference (MCEC) here today.
He noted that excessive borrowing would turn into negative or less growth moving forward and stressed the importance of national champions’ role in various economic sectors.
“We need more national champions like Petronas and Top Glove Corp Bhd to become global brands that not only create high-paying jobs but also advance the nation’s interests,” he said, adding that a clear and cohesive plan is needed for regulated entities to become national champions.
For example, he said, BNM was successful in turning domestic-centric banks into notable regional forces, transforming the sector into a competitive industry, and nurturing these institutions to compete beyond national borders.
The 12th MCEC allowed for business matching and interactions between Malaysia and China’s small and medium enterprises, and further discussions on the Regional Comprehensive Economic Partnership. – Bernama, December 15, 2022
