MALAYSIA will lose RM416.6 billion in revenue if the goods and services tax, tolls, National Higher Education Fund Corporation (PTPTN) loans and excise duty are abolished, said the Treasury secretary-general.

Mohd Irwan Serigar Abdullah said abolishing GST will cause Malaysia to lose RM45 billion, tolls (RM338 billion), PTPTN loans (RM3.9 billion) and excise duty (RM2.4 billion).

He said this will also increase the country’s debt.

“We will lose RM45 billion if we eliminate GST. It’s a big figure, and we did not introduce it just like that, but only after having studied it for years.

“A total of 160 countries in the world have implemented GST. It’s implemented in various percentages, but in Malaysia, we take 6% – a more reasonable rate, and not burdensome to the economy and people,” he told reporters in Kuala Lumpur today.

He said he is worried about recent reports on current economic conditions.

“More than 500 basic items, among them rice, sugar, vegetables and medical goods, are not subjected to GST because the tax here is different from other countries.

“In India, which introduced GST after Malaysia, the rates vary, between 5% and 28%.”

Irwan said Saudi Arabia will also introduce GST, in a bid to reduce its dependence on oil.

“When oil prices drop, the government’s revenue becomes unpredictable. In this respect, Saudi Arabia is in talks with experts from Malaysia to introduce GST there.

“When GST was introduced in Malaysia on April 1, 2015, oil prices fell from US$100 (RM390) per barrel to less than US$40, and the government’s revenue fell.

“We cannot be in a state of uncertainty. We have to pay salaries, manage the country, hospitals, education… they need revenue.

“If we do away with GST, we will lose RM45 billion, and even if we are to reintroduce the sales and services tax, the collection will amount to just RM18 billion. So, how can we get the other RM27 billion?

“On tolls, the Finance Ministry has to pay compensation to companies, because they have investors, such as the Employees Provident Fund, which earn money that comes from tolls.

“In the Klang Valley, there are 19 tolls. Outside the Klang Valley, 12. If the government wants to step in, we have to pay RM338 billion.

“If we add the RM338 billion to the national debt of RM686 billion, our debt will increase to RM1 trillion, and if we divide the size of Malaysia’s RM1.3 trillion economy, it means that the nation’s debt will rise to 78%.”

Irwan said Malaysia has a policy stating that national debt should not exceed 55% of gross domestic product, and it currently stands at 50%.

“When we are in debt, ratings agencies will rate us accordingly. Now, we are at ‘A-’, a strong rating.

“Investors will come when the nation is stable. However, if the debt grows bigger, investors will not invest and the economy will be unstable.”

On PTPTN loans, he said the government also provides relief in certain cases.

“If the student’s score is good, he does not have to pay back his PTPTN debt. And if one is consistent in paying, PTPTN will give a discount of between 10% and 20%.”

He said the country’s economy is on track in terms of financial management, and recorded a growth of 5.9% last year.

“Our economy is solid. It grew 5.9% last year, and this year, we expect the economy to continue growing at between 5% and 5.5%.”

He said the inflation rate is under control and expected to be between 2% and 3% this year, while the unemployment rate is at a low of 3.4%.

He added that the ringgit has strengthened, at RM3.90 against the US dollar.

“We will keep this momentum. I am a senior official at the Finance Ministry. It is my responsibility to provide clarification on the economy’s real situation,” he said, adding that he has been with the ministry since 2002 and has more than 15 years’ experience in drawing up the government’s budget. – Bernama, March 11, 2018.