PUTRAJAYA (THE STAR/ASIA NEWS NETWORK) - The implementation of the Goods and Services Tax (GST) and the rationalisation of subsidies in Malaysia gave the government income to spend in times of economic uncertainty, Prime Minister Najib Razak said on Monday (May 9).

Datuk Seri Najib said these "proactive measures" had enabled the government to still give civil servants a pay rise and build the Pan Borneo Highway despite the slow economy.

"The price of oil went down drastically. Other commodities are priced at a low level.

"Yet, we are still able to implement many development projects and take care of civil servants' welfare.

"The pay rise for civil servants and the increase in minimum wage will still be implemented this July. The Pan Borneo Highway, which costs RM16 billion (S$5.3 billion) for Sarawak and RM12 billion for Sabah, we can still build.

"Why? It's due to the proactive measures we took.

"I spoke with the new Bank Negara governor recently and he said if the government did not introduce the two 'brave' measures which is the GST and subsidy rationalisation, Malaysia's economy could have ended up like Greece's," Mr Najib said in his address at the Prime Minister's Department's monthly assembly.

He added that the recent Sarawak election results showed that the population understood the necessity of implementing the GST.

"In Sarawak, the opposition used the GST as an issue, but it didn't work for them. The people have begun to understand that it is a fair move and it's purpose is only for the people's future," he said, adding that the Government had also given the 1Malaysia People's Aid (BR1M), tax exemptions and introduced zero-rated items to lessen the impact of GST.

On Barisan Nasional's victory in the Sarawak state election, Mr Najib said the government must find solutions for the problems of the people of Sabah and Sarawak.

"The development divide between Peninsular Malaysia with Sarawak and Sabah is our top agenda.

"They gave us their trust because we had a clear plan which we showed we could execute and deliver.

"Although developing the two large states will obviously take more time and cost more, it is morally wrong for us to not provide their people with basic necessities. We must find creative ways to solve their problems," he said.

In the recently-concluded election, Barisan Nasional won 72 seats out of 82 in the Sarawak state assembly.