PETALING JAYA: As the focus now turns to the country’s new Cabinet, questions also arise over the projects and policies that may potentially be revived, such as the Goods and Services Tax (GST) and the High Speed Rail to Singapore.
Economist Dr Yeah Kim Leng (pic) said while the new Cabinet may revise some of the economic strategies for the country, it is unlikely that GST would make a reappearance any time soon.
“Given its unpopularity and a factor in the fall of the Barisan Nasional government in the 14th General Election, it is unlikely that the Perikatan Nasional government will reinstate GST soon.
“A change will also be disruptive to businesses and trigger another round of inflation as the tax burden on consumers was reduced by about RM20bil when it was replaced by the Sales and Service Tax (SST), ” he said.
He added that the new government would have to act swiftly to contain the impact of Covid-19 on the country’s financial and economic situation.
“The immediate priority is to shield the economy and financial markets from the Covid-19 impact and global growth slowdown by implementing a virus containment strategy and the economic stimulus package quickly and effectively.
“Next, the Cabinet will have to decide on economic policies and strategies, especially whether the Shared Prosperity Vision 2030 and 12th Malaysia Plan will be adopted or revised.
“Unless the public and investors have a clearer view of the economic direction and strategies, the uncertainty will remain unsettling for local and foreign investors, ” he said.
Another economist, Dr Chung Tin Fah, however, said the GST regime may resurface along with projects such as the High Speed Rail. “GST might make a comeback as it is a comprehensive and administratively better tax. It was unfortunate to be caught in the election manifesto. The High Speed Rail may also return, given the interest from Johor, ” he said. Currently, he added, the government must ensure stability and continuity in order to establish investor confidence.
“They must carry on with the previous government policies as far as possible to retain investors’ confidence, ” he said.
Previously, Umno supreme council member Datuk Armand Azha Abu Hanifah said he hoped that the new government would reintroduce GST, but at a lower rate of 3%.
The GST was introduced in 2015, then abolished and replaced with SST in 2018.
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