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According to Nikkei Asia, Mr. Anwar Ibrahim, Prime Minister and Minister of Finance of Malaysia, has submitted to the country's Parliament a draft budget for 2024 (more than 83 billion USD), which includes bold reforms for the economy with new tax measures.
Mr Anwar said the budget plan has three focuses: good governance to ensure service flexibility; restructuring the economy; and improving people's living standards. The government will help people reduce their living costs by allocating subsidies for food, fuel and other essential needs.
Malaysia also aims to increase revenue without burdening its citizens with high taxes on luxury goods, increasing the sales and services tax from the current 6% to 8%, excluding food, beverages and telecommunications. This is in line with the plan to build a new economic framework for Malaysia called the Madani economy, which aims to improve the lives of its people, according to the head of the Malaysian government.
The Madani Economy, announced by Prime Minister Anwar in late July, is a comprehensive initiative to help Malaysia address its current economic challenges. The initiative sets out seven goals over the next 10 years, including: placing Malaysia among the world’s top 30 economies; among the top 12 countries in the Global Competitiveness Index; among the top 25 countries in the Human Development Index; among the top 25 countries in the Corruption Perceptions Index, etc.
However, The Straits Times quoted some experts as saying that the new tax measures this time will only be a stepping stone, not a real change that will impact Malaysia's treasury (tax revenue is expected to increase by only a modest 1.5% in 2024).
Wan Suhaimie Saidie, director of economic research at Kenanga Investment Bank (Malaysia), commented: "The Malaysian government is having a tax strategy. It is not as effective as expected, but it can be expanded in stages. I think the government is being cautious, not wanting to put the burden on the middle class too soon."
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