FORMER Bank Negara Malaysia (BNM) governor Tan Sri Muhammad Ibrahim said Malaysia needs to ‘relook’ at its existing taxation system in order to have a more comprehensive and equitable system.
“An equitable tax system should involve value-added tax and should not become a political issue for the sake of better economic growth.
“This is to ensure Malaysia has the revenue options and refrain from entering into a debt trap over the long run although the country’s debt level is still relatively lower, about 50% to 60%, compared to Japan and some other countries with over 100% debt level,” Bernama reported Muhammad as saying.
According to Muhammad, the debt trap’s implications will not only slow economic growth, but will also affect financial markets such as the equity and bond markets, leading investors to lose confidence in Malaysia.
Muhammad further noted due to the nature of the tax system, approximately 30% of the economy does not pay taxes.
“Excessive borrowing would turn into negative or less growth moving forward and stressed the importance of national champions’ role in various economic sectors,” he added.
“We need more national champions like Petronas and Top Glove Corp Bhd to become global brands that not only create high-paying jobs but also advance the nation’s interest.”
However, Muhammad emphasised that a clear and cohesive plan is needed for regulated entities to become national champions.
BNM was effective in transforming domestically-centric banks into significant regional forces, turning the market into a cutthroat business, and preparing these institutions to compete internationally. — Dec 15, 2022
Main photo credit: The Star
