By SHAHEERA AZNAM SHAH / Pic By MUHD AMIN NAHARUL
THE dimming outlook on Malaysia’s fiscal condition predicted by credit-rating agencies will not hinder investor confidence in the country, said Deputy International Trade and Industry (MITI) Minister Dr Ong Kian Ming (picture).
He said the rise in the country’s fiscal deficit to 3.7%, which was recently announced in Budget 2019, is expected to be temporary.
“We want to make it clear that the increase in the budget deficit, as well as the revenue reliance on the new and existing taxes, is temporary.
“We have addressed such concerns as Finance Minister Lim Guan Eng had visited credit-rating agencies in Singapore and Hong Kong.
“(As such) I believe that investor confidence in Malaysia would not be affected because the concerns of rating agencies have been addressed,” he said at the Dialogue on Budget 2019 and Industry 4.0 in Selangor last Friday.
Ong said continuous investment remains crucial to the government in serving the revenue shortfall arising from the scrapped Goods and Services Tax (GST) and income tax refunds.
“We do not expect Petroliam Nasional Bhd (Petronas) to be paying a special dividend of RM30 billion in the next five years.
“(The investment) is something that we need in the short term to cover the shortfall; to pay back the GST and income tax refunds,” he added.
When tabling Budget 2019, Lim announced that the GST refund stood at RM19.4 billion as at May 31, 2018, while the income tax refund was RM16 billion, bringing the total amount to RM35.4 billion.
The finance minister also mentioned that the government is expecting to receive a special dividend of RM30 billion from Petronas, which will be channelled to repaying the GST and income tax refunds.
Meanwhile, Ong said the flexibility achieved in the negotiation of the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP)
should be considered in the decision to pursue the trade pact’s ratification process.
“Now that the US is no longer included in the trade pact, some of the concerns that we had before, such as the investor-state dispute settlement mechanism and intellectual property rights, have been suspended.
“This can be considered as a positive note for the government to include in the cost benefit analysis in making the decision whether to ratify the CPTPP or not,” he said.
Recently, Prime Minister Tun Dr Mahathir Mohamad said the government is reviewing the potential impacts of CPTPP prior to moving forward with the ratification process of the free trade agreement.
He added that concerns remain on the country effort’s to distribute wealth in an equitable manner.