SINGAPORE: Prime Minister Datuk Seri Anwar Ibrahim has emphasised that the government should reduce subsidies for the wealthy before considering the reintroduction of the Goods and Services Tax (GST).
During an interview with Bloomberg's Haslinda Amin at the 10th Annual Asia Summit of the Milken Institute, Anwar acknowledged that the GST represents the most efficient and transparent tax system.
"When do we implement it? It depends on the threshold. When people are living in abject poverty, you have to introduce progressive tax policies, but not a broad base policy that affects the very poor.
"So, you have to give some time, but then do you do nothing? No. You have to broaden the tax base, for sure. But you first have to reduce subsidies for the rich," he said.
Anwar also acknowledged that rationalising subsidies may not be a popular decision, but he highlighted that the government has a four-year window before the next election. Consequently, he stressed the urgency of expeditiously addressing subsidy rationalisation, given that Malaysia's subsidy expenses are among the highest in Asia.
Regarding investment, Anwar said that Malaysia is concentrating on establishing clear and transparent policies to attract investments, mirroring the nation's success in the 1990s. He expressed confidence that, with the right policies, economic clarity, and good governance, Malaysia could surpass its achievements from the 1990s.
He underlined the importance of a capable team and the necessity of fostering an environment conducive to business, advocating for transparent economic policies that embody the principles of Madani– to be caring and compassionate. Anwar underscored the need to address issues of inequality, particularly in regions like Sabah, Sarawak, and parts of Peninsular Malaysia.
Highlighting recent successes, Anwar noted that Malaysia had attracted significant investments over the past five to six months from major players in China, the United States and Europe.
Infineon Technologies he cited, pledged an investment of €5 billion (approximately RM24.9 billion) into Malaysia, a development that is poised to bolster investor confidence. This would make them the largest contributor to the economy.
Anwar also revealed that Tesla has chosen Malaysia as the location for its operational headquarters, scheduled to open by the end of October or early November of this year. He mentioned the involvement of three Malaysian companies collaborating with SpaceX and the potential benefits of Starlink technology for Malaysia.
Responding to inquiries about favoured investment sectors in Malaysia, Anwar said there is anticipated growth in digital transformation, energy transition, and renewable energy. He stressed the importance of offering an attractive investment tax regime, committing to do whatever is necessary to ensure that Malaysia remains a competitive and appealing destination for investors.