By P PREM KUMAR / Pic By MUHD AMIN NAHARUL
The Pakatan Harapan government is expected to formulate the right mechanism to end the Goods and Services Tax (GST) within the next 100 days, one of the key promises made by the coalition during the 14th General Election.
Former Bank Negara Malaysia (BNM) governor and Council of Eminent Persons member Tan Sri Dr Zeti Akhtar Aziz also stressed that the country’s sovereign credit ratings should not be affected with the abolishment of the GST, as the government will balance expenditure and revenue.
“The fiscal position can be improved not only from the revenue side, but also the expenditure side. There will be re-prioritising of projects, efforts to increase the government’s efficiency and reduce wastage in the public sector,” she told reporters after meeting some 180 fund managers in Sasana Kijang yesterday.
Zeti said the ringgit and fiscal environment will perform better when confidence has been restored and the country’s fiscal conditions improve.
She said the Pakatan Harapan government, led by Prime Minister Tun Dr Mahathir Mohamad, is working hard to address all the areas related to the currency and fiscal conditions.
“When the fiscal regime and fiscal conditions improve, this is the final factor that will contribute to us having a better opportunity to have our ratings improved.
“Because in all other categories — our financial system, the macroeconomic conditions of inflation, financial stability — we already should have a higher rating by the rating agencies.
“But because of the fiscal issue…that is the reason we are still a single A when we actually have the potential to be AA rated,” she said.
Zeti said the government’s plan to abolish the GST should not affect Malaysia’s credit ratings as long as its fiscal position improves.
“The efforts to improve revenue and contain expenditure will improve the fiscal position; and when fiscal position improves, I believe we will get a better rating,” she added.
She said the government is expected to announce the abolishment of the GST in the first 100 days of the new government.
“We will announce how we intend to do this, either by zerorising it or in whatever other process it will be done.
“It has been decided. So now, it’s only a matter of how it will be done,” Zeti said.
The country’s first female BNM governor is one of five Council of Eminent Persons members. The council was formed to assist the new Pakatan Harapan government to re-engineer the country’s economy.