KUALA LUMPUR (BLOOMBERG) - Malaysia's government will pay more attention to economic sectors most affected by the coronavirus pandemic such as tourism and retail, and will wait for the recovery to gain traction before considering any new taxes, the country's finance minister said on Friday (March 26).
The Finance Ministry is studying the possibility of a consumption tax, but "we have decided this is not the right time to introduce any new form of taxation", Finance Minister Tengku Zafrul Abdul Aziz said in an interview with Bloomberg Television. "After the economy has recovered, we really need to relook at widening our revenue base."
Bank Negara Malaysia will disclose its gross domestic product forecast in its annual report due on March 31, but Datuk Seri Zafrul said that for now, the government is maintaining its expectation that the economy will grow 6.5 per cent to 7.5 per cent this year after contracting 5.6 per cent in 2020.
"The focus of the government today is on the economy's revival, we would like to jump-start the economy," he said. "We have to balance between short-term fiscal injection to the economy with medium- to long-term fiscal consolidation."
The World Bank, in its regional projections released on Friday, said it expects Malaysia's economy to expand by 6 per cent in 2021, slower than the 6.7 per cent forecast previously, after factoring the recent spike in Covid-19 infections, political uncertainty and slower than expected vaccine roll-out in developed economies.
Malaysia announced a RM20 billion (S$6.5 billion) package last week to revitalise the economy as the pace of new Covid-19 infections slows and vaccines are rolled out. The plan included RM11 billion in direct fiscal injection, which Mr Zafrul said would be funded through domestic borrowing.