Photo: IZZRAFIQ ALIAS/The Star
IT took him a while to agree to become a minister as Senator Datuk Seri Amir Hamzah Azizan is not a politician. However, the call to serve the nation is in his blood, the 57-year-old says: “I think it comes from my father who’s been in the civil service all his life. He passed away while still working as part of the government. So the need to help and do something is in the family DNA.”
The Finance Minister II recently sat down with Sunday Star for an exclusive interview. The following are excerpts from the session.
> Do you have a revenue projection from the tax measures announced under Budget 2025?
When we were looking at the expansion of the SST [sales and service tax], we were looking north of at least RM5bil.
Tax space is one of the areas that we can improve in terms of revenue, and one of the systems we have today is the SST.
We have to see how we can enhance revenue collection but also at the same time if we were to do the enhancement of revenue collection, we do not put unnecessary barriers or costs into the system that slow down the economy or place the rakyat in a much more difficult place.
When we enhanced the SST, the first round was last year in March, it went up from 6% to 8%. We also expanded a little bit but it was a small expansion
In this year’s [2025] budget, we proposed to expand the range of it, but looking more in terms of business-to-business areas of expansion. This is so that the rakyat is somewhat protected from the effect of what we are putting in place, and it generates revenue to enhance the fiscal balance of the government.
Fiscal balance is important because if we have fiscal balance then we can start investing in the right things that the economy and rakyat need.
> The government has repeatedly said it will not bring back the goods and services tax (GST), but MPs have repeatedly called – and keep calling – for its revival. Is it correct to say the government will never bring back the GST?
I don’t think the Prime Minister has actually said that the GST will never come back. What he said is it is not an appropriate time to revive it. We have other tools to make things work, for one the SST scheme can be expanded to achieve what we need at this point in time.
The SST has been around for more than 40 years and its familiarity makes things much easier – reintroducing the GST means educating the whole system. On practical grounds, with the SST we can expand because it is just a small expansion every time, the gazettement and all are easy to administratively manage.
But the GST means we have to go back again and reinstall the whole system. Industries must be coached on how to do it, they must install new IT systems. It is not just a matter of turning on and off again. And there are new industries built when GST was not in. The lag time to that, we estimate between 18 months and 24 months.
To bring back fiscal balance, and to have the right tools in place, we need to do something now. The expansion of SST is the right form.
> When can we expect the mechanism for RON95 fuel subsidies to be fully rolled out?
The government wants to make sure whatever it installs is something that is well thought through and that there are no unintended consequences.
We are taking our time to test the system well, make sure the data we have gained and refined is actually giving the right things. So I must appeal for time to be given to do the right thing.
We understand every time when there’s a new thing coming in, there will be unfamiliarity in the early stages, there will be noise, there will be some nitty gritty things that trip along that way.
But in overall form, I think the roll out of the diesel subsidy rationalisation has been reasonably handled and it is actually part and parcel of our daily lives now. We want to get to the same outcome for RON95.
If you ask me to give a date, I think the rigour, the double checking, testing, and simulating is more important. We are testing the system that we will use to make sure it works, so we have fewer issues by the time we roll out.
The principle is that 85% of the rakyat will not be affected. We want to make sure that society is protected through the process. We also stick to the principles that we want to use a system that is easily managed and rides on tools that we can see.
> The individual tax relief has been RM9,000 for years. Is that realistic?
The government has no immediate plans to lift the rate from RM9,000. We believe a much more targeted mechanism tool is a better way to do it.
The government is actually offering more tax reliefs, but targeted at certain groups. Last year, we gave first time house buyers, because we are concerned that the young generation will not be able to come on the ownership side.
We also gave waivers to people who are looking after their parents in terms of medical needs.I think those are much better tools, rather than blanket waivers to give along the way.
> Some ministries have indicated that they want to manage their own tax collection. Is this being considered?
We are guided by what is stated in the Federal Constitution, that all monies and revenue collected is deemed federal and must go into the consolidated fund.
We can agree on the mechanism [to share funds] but it must still come into the consolidated fund and we can increase the allocation after that.
For example, for the sugar tax, we have an agreement with the Health Ministry for any new additional collection we get, we will share a portion of that with the ministry so targeted interventions can be done.
We also have agreements with the Road Transport Department when they do special number plates, some proceeds are used for road safety.
We want to encourage ministries to look for ways to self generate in a reasonable form. We are prepared to share some of it along the way, but there’s no natural entitlement.
> Is the RM1.2 trillion national debt level sustainable?
In 2021, the fiscal deficit of the GDP was 6.5%, and we brought it to 5.5% the following year, and in 2023 we took it down to 5%. Last year, despite a target of 4.3%, we achieved 4.1%.
This puts us on a good trajectory to achieve targets in the Fiscal Responsibility Act that by the end of 2028, we should be below 3%. This year’s target is 3.8% and I think we can do a bit better than that.
We want to address debt but we have to be practical. As long as we run a deficit, the absolute debt will go up. The proportion of debt to GDP is important. GDP is your ability to pay, our earning level. As long as we bring down the ratio of debt to GDP, we are on the right track.
Every year since 2021, there was RM100bil new debt coming in, then it reduced to RM90bil, and last year it was down around RM77bil. We have been reducing the fiscal deficit. I believe we can get on the path of achieving debt to GDP below 60% at the end of 2028.
> PETRONAS dividends are an important source of revenue for the government. With what’s happening between PETRONAS and Petroleum Sarawak Berhad (Petros) are you expecting lower dividends in the future?
The revenue from PETRONAS at one point was more than 40% of total government revenue. In 2023, it declined to about 19% to 20%, and in current projections, we are going to try to take it down to about 15% while at the same time growing other sources of revenue.
So then again, same concept – diversification. We should not be overly dependent on one.
As for PETRONAS and Petros, discussions are still ongoing. They have worked out a win-win solution. If there is some sharing of revenue that happens along the way, does the country lose? The answer is no.
If Petros were to gain some money, they would still spend it to grow the oil and gas industry in Sarawak. From the GDP point of view, the country still gets revenue, just that it is allocated from a different vehicle.
We have to recognise that PETRONAS has done well over all the years. It built a Fortune 500 company. It has been growing well overseas. In that sense, it has resilience in its system.
It may have to do some optimisation to sustain, and I am sure [PETRONAS CEO] Tan Sri Tengku Muhammad Taufik Tengku Kamadjaja Aziz and the leadership there will be looking at how to sustain better going forward.
The country has progressed compared with the earlier days and our dependency on PETRONAS has declined over the years.
If you look by segment, FDI [foreign direct investment] now is translating into construction because they need to build data centres, new factories.
I saw some numbers not too long ago from the Investment, Trade and Industry Ministry and Bank Negara Malaysia which say in the past about 70% of all approved investments were converted to reality and that number has now increased to 78.7%. So that’s good. It is really making sure that what we promised translates on the ground.
This February, we pushed up the minimum wage to RM1,700. What it does is it spurs private consumption. The leg of the economy now will have FDI, DDI [domestic direct investment], and private consumption. We just need to focus on how we continue to feed this engine, so the whole economy will continue to churn well.
Is it going to be perfectly smooth? Nothing in the world is perfectly smooth, but if you focus well and get more done, have the resilience, our plans are clear, we have the ability to transform the economy
> What has your journey been like moving from boardrooms to government service?
I have been a corporate person all my life, working at Shell then moving to the PETRONAS group of companies and so on.
It took me a while to agree to become a minister because the role is very different from the things I did. But the PM has given me space to help him in different ways. I hope I contribute enough to help him do a good job in the Finance Ministry.
There is also some learning that I have to do. When you work for a corporation, your delivery period is short. Here, it is about how we balance long-term policy changes, how we have to think through the consequences of decisions we make, how to work with a wide range of groups and somehow get people to align with a common goal.
It’s been a lot of hard work, a lot of sleepless nights, but I have truly enjoyed the journey. I hope it has made an impact and people can see some of the good impact coming from our work.
> What has been the most challenging period for you in the past two years?
I am somewhat of a private person, you never find me very much on social media and all, but some things come with the job. So having to understand that it comes with the job and being able to do it well enough is something I have to address.
There's some things ... that with it, carries a role. You are supposed to recognise that you are a symbol. You cannot do things that disrespect the role you are trying to do. There are a lot of changes that have to be adjusted to.
I’m very grateful that I have a very supportive family, I think that has helped to manage this process.
> What is one thing you have done in the past two years that is worth mentioning?
There is nothing that one does that is solely one’s work.
You can only achieve things when you have the whole system adjusted. When we wanted to do the diesel rationalisation, people said it cannot be done, it is going to break, it is going to cause inflation, there will be protests in the street.
I am proud of the fact that even with difficult decisions, we have a great bunch of people who are willing to work the hours and make sure it is not just the system and policy but everything is done well.
Personally, I’m gratified that we can see some of the decisions that we made that were translated on the ground and we are beginning to see the right signs that we are pushing the country forward.
I learned a lot in this job, I have to adapt to a lot in it. I never thought I would go into Parliament and answer questions, but now I have to, it is part and parcel of the job.
But neither did I believe that I would have the opportunity to work with a lot of good people and find common alignment and start making a difference.
Hopefully we will carry a better Malaysia forward. So it has been a fulfilling journey.
