By Shannon Teoh
The Malaysian Insider
Oct 11, 2011
KUALA LUMPUR, Oct 11 — Global banking giant Goldman Sachs believes Malaysia must push through tougher reforms such as a goods and services tax (GST) and slashing subsidies if it wants to transform into a high-income nation.
Its review of Budget 2012 proposals said the recovery in private investment since the 1997 Asian financial crisis has been held back “by scepticism over the government’s transformation efforts over the years.”
“Pushing through tougher reforms is ultimately what is needed to catalyse the economic transformation process.
“Reforms such as the goods and service tax (GST) and fuel subsidies reforms (likely only post-elections) would be the clearest way to signal to investors the commitment to change,” the bank said in its review dated yesterday.
Datuk Seri Najib Razak’s Economic Transformation Programme (ETP) aims to more than double per capita income by 2020 to RM48,000 a year.
The prime minister wants the private sector to contribute 92 per cent of the RM1.4 trillion investments targeted under the 10-year plan.
But with an election expected soon, he has delayed GST and raised allocations for subsidies to RM33.2 billion.
“The timing and extent to which the government is able to deliver on these key reforms will partly depend on the performance at the upcoming general election, which we think could potentially occur early next year,” said the US bank.
Its Global Economics, Commodities and Strategy Research report also dismissed the “inflationary impact” of the fiscal stimulus in the RM230 billion budget, saying it was “arguably appropriate given the rising threats to external growth.”
But it forecast a 4.2 per cent growth for 2012, “markedly short” of Putrajaya’s target of between 5 and 6 per cent.
“We had recently revised our GDP forecasts for Malaysia mainly on the back of slowing global demand,” the bank said.
It listed some of Malaysia’s main trade partners such as the United States, China and Europe as markets which will see reductions in economic growth.
This would result in potential revenue shortfalls which will make Putrajaya’s plan to trim the budget deficit from 5.4 to 4.7 per cent target tough to achieve, the report said.
“A potentially wider-than-projected fiscal deficit is also plausible… with the external slowdown and upcoming elections, there will be more pressure to deliver on expenditures,” said the bank.
Can a PM, who is also the finance minister, push through tougher reforms such as a goods and services tax (GST) and slashing subsidies? The PM wants to win the forthcoming general election but is reluctant to push through tough reforms. The finance minister wants to push through tough reforms but does not want political hindrances to delay his plan. The ultimate issue is, can a PM be a good reformer while holding the contradictory post of finance minister?
I wonder how many PMs in the world are also finance ministers.
You keep reading advises from world experts..to our Govt. and always been ignored….for they have so much corruptions….it it totally impossible to do it straight and simple.
It must always go round and round…and come back to nothing.
The fact of the matter is….a very large potion of the populations are made to struggle to make ends meet….and the poorer Malaysians become…the better for the crooked Govt.
But there is a point they must stop or else millions will take to the streets like FOR or AGAINST change……
So now….the good Budget to cool things.
How many Malaysians trust Najib’s leadership?
Strangely….it will be the selfish calculative rich and middle class voters that are thinking hard…and not the ordinary wage earners.
In this Boleh Land, the PM since the 80s [ you know who was PM then] MUST also ne the MOF so that all decisions can be from either Ministry. Not many questions can be asked and the answers will depend on who is asking? The objective is not on concentrating to ensure the continuous growth of the nation: the objective is HOW to spend the resources! PM is supposed to provide the national leadership and not to be bogged down by the policies of the spending, once approved by the Parliament, by the MOF. Here it has to be different as by-elections are common.
The only way to get high income under this lazy umno goons govt is to work overseas. Unless you are in umno barisan and be as corrupt as you can be. See the wealth of toyol and taik. or if you are lucky as roastmah where she starts saving RM1 million a year from the day she pops out to afford the 70million ring.
People have to learn to read these things better. When Goldman Sachs or any of the investment houses says these things, they are concern about making money only i.e., their bonuses at the end of the year. They don’t ask why GST is so important? Why cutting subsidies is so important? Because they don’t want to address the more complicated issue of waste and corruption in the country that makes GST and cutting subsidies necessary.
In other words when the sharks tell you, you have to raise taxes and cut subsidies – he is just telling you, you are spending too much and wasting too much and he won’t tell you the real bad news less you hate them..
http://www.themalaysianinsider.com/malaysia/article/recession-risk-high-and-rising-says-rhb/
Malaysia’s economic growth could slow to just 3.6 per cent next year from a projected 4.3 per cent this year due to the increasing risk of a double dip global recession, said the RHB Research Institute.
The RHB unit’s growth projection issued yesterday is significantly lower than Prime Minister Datuk Seri Najib Razak’s forecast of five to six per cent growth for 2012.
Bank of America Global Research estimated Malaysia’s gross domestic product GDP to grow at 4 2 per cent in 2012 while Maybank Investment Bank said it expected Malaysia’s GDP to expand at between 3.5-4 per cent. CIMB Investment Bank forecast a GDP growth of 3.8 per cent next year.
so what?
Malaysia’s economic planners are so much better than all those investment bankers…..hahaha.
Excuse me for laughing…almost choked on my chappati!
“NR’s ETP aims to more than double per capita income by 2020 to RM48,000 a year”
Ai yo yo, CAN aah? Did he NOT know MMK encouraged some rakyat 2 b very productif 1, poke poke, shiok shiok, babies popping out by d dozen?
It’s a fact 1M’sia’s population n corruption on d rise fast n furious, while income growth not on par
HOW 2 double per capita income by 2020, when truly we r on d way 2 BANKRUPTCY?