Written by Maria Begum, published by Malaysia Chronicle on 25 November 2013.
Finally, Prime Minister Najib Razak has admitted it. The spectre of bankruptcy does dog Malaysia. This frightening prospect was first exposed by Minister in the Prime Minister's Department Idris Jala, who in 2010 had warned that Malaysia could go belly-up by as early as 2019, which ironically is one year ahead of the Umno-BN government's 2020 deadline for the country to reach 'developed nation' status.
The brouhaha that followed Idris' warning, with the public lashing out at the Najib administration's perceived mismanagement of the economy, had triggered a spate of high-profile denials from including Najib himself, his deputy Muhyiddin Yassin and former prime minister Mahathir Mohamad.
However a day ago, Najib rehashed the possibility of bankruptcy. It may be his back was to the wall and he was trying to catch a bogeyman to blame the unpopular Goods and Services Tax on. However, many experts do not preclude the possibility of bankruptcy ala Greece for Malaysia at all.
In fact, ratings agencies like Fitch have warned against Malaysia's record-high and still climbing national debt and fiscal deficit. And although Moody's had last week restored Malaysia's outlook to 'positive' from 'stable', Najib's latest admission reignites speculation that Moody's decision may have prompted by strong lobbying and marketing by Finance Ministry officials.
“We have to find additional sources of income and that’s why we have to implement the GST,” the Star reported Najib as saying at a seminar on Strengthening the National Economy on Sunday. Najib also holds the post of Finance Minister despite growing calls for him to relinquish the portfolio that many critics say he has neglected and is under-qualified to hold.
Back to the wall? Bankruptcy ala Greece
According to Najib, Malaysia has a stark choice of either increasing government revenue via the GST or burdening the country by borrowing more money. Defending the GST, Najib insisted it was necessary as the country risked becoming bankrupt like Greece if it resorted to borrowing.
He also said the government's decision to introduce GST was the reason why Moody’s agreed to re-rate Malaysia's outlook; hence, the new tax could not be a negative move as suggested by detractors. “This is because they know Malaysia was taking fiscal consolidation steps which are unpopular but necessary for the good of the country,” said Najib.
Najib lashed out at the Opposition for their 'mixed' comments about whether they supported the GST and for allegedly clouding the issue with unfair arguments, including the high electricity bill of his official residence,
He pointed out Seri Perdana belonged to the people of Malaysia and he was occupying it temporarily just like his two predecessors.
“It has a function room. If a head of state comes, are we expected to dine in the dark? “If the Chinese premier comes, should we use candlelight and say this is more romantic?” he quipped.
'Tighten the belt at your end first before passing the buck to the people'
However, Opposition politicians were unimpressed by his arguments. They insisted that Najib should practice greater austerity, such as as slashing down his own lavish spending on "questionable policies" as well as his well-known luxurious official lifestyle, before calling on the people to pay new taxes.
"He is showing his shallowness and a dishonesty in trying to give silly answers. We are asking why in this time of difficulty does he not try to cut costs and save money. His electric bill is over RM2 million and if he can bring that down, it would already help," MP for Batu Tian Chua told Malaysia Chronicle.
"As for GST, what confusion is there? The Opposition is very clearly against GST not because of the tax system itself but because we believe the majority of the people are still poor and cannot afford additional burden at this point of the economic cycle.
"Najib also tries to justify the GST by saying the bulk of the population does not pay taxes. This is a good question for him to answer to the people - why after so many years of Umno-BN rule are the majority of people still so poor that they fall below the tax line? Is it to do with the massive corruption of the Najib administration and the Umno-BN that the masses are left behind while the country has a huge debt? And now, Najib wants the people to pay GST to help the government reduce the debt it racked up through corruption and plundering - is this fair, is it right?
Unpatriotic not to pay GST
Tian was referring to Najib's comments that out of an entire workforce of 14 million, only 1.34 million paid income tax. “That is just 10% who pay, and there are others who should pay but don’t,” Najib defended himself and his government.
He then pointed out the definition of patriotism is fulfilling one’s responsibility to the country and this included paying taxes. He added that the public’s expectations on the Government was always increasing, and more revenue is needed to meet these demands.
The PM said Malaysians could not always depend on revenue from petroleum which will eventually run out. He said the public’s fear that the GST would cause staggering price increases was unfounded. According to Najib, 160 other countries have implemented the GST and from their experience there is only a slight increase in prices in the year of implementation. “It is unlikely all these countries made a mistake by implementing the GST,” he said.
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