A Response to “5 Key Things to be Executed Before Implementation of GST”

In a letter dated December 8, 2015 to an online news portal, the writer suggested that the government should execute 5 key things before implementing the GST. He concluded that the implementation of the GST should be postponed until Malaysia is a high-income nation. The letter was full of factual errors and misinformation that an enlightenment of the issues articulated is warranted. 1. Foreign Direct Investments According to the writer, existing laws, rules and policies are driving away foreign investors to the detriment of the Malaysian economy.

Malaysia recorded its highest everforeign direct investments (FDI) of RM38.774bil (USD12.306 billion) in 2013, a 24% increase over 2012 and 3.9% higher than the last record of RM37.3bil achieved in 2011. The increase of FDI in Malaysia compares favourably to the increase in global FDI of 11%, 6.2% into developing countries and 2.4% in South-east Asia. 2. Malaysia as a high-income nation by 2020 The government launched the Economic Transformation Programme (ETP) on September 25, 2010. The ETP was formulated as part of Malaysia’s National Transformation Programme. Its goal is to elevate the country to developed-nation status by 2020, targeting GNI per capita of USD15,000. This will be achieved by attracting USD444 billion in investments which will, in turn, create 3.3 million new jobs. In arriving at the high-income threshold of USD15,000, the Government followed the World Bank’s threshold for a high-income economy of USD12,476 and factored in its published historical global inflation rate of 2% until 2020. The ETP represents the catalyst for economic growth and investments needed for Malaysia to achieve high-income status by 2020. The government’s role in the ETP is that of a facilitator, coordinating, tracking and monitoring the programme. While the government will prioritise its policies and spending for the ETP, the bulk of investments, targeted at 92% by 2020 are to be financed by the private sector. 3. Employability of new graduates To promote employability of new graduates, the government has launched the National Graduate Employability Blueprint (2012-2017). The objective of the GE Blueprint is to produce graduates in order to fulfill national and international manpower needs with 75% of the graduates employed in their relevant fields within six months of graduation. The government takes cognizance that the Malaysian economy is an open economy driven primarily by foreign direct investments and export growth. The education system must meet changing demand conditions in terms of the needs of multinational and large corporations. The GE blueprint is to ensure that the country is able to produce adequately and appropriately trained human resource and does not face a skills-shortage problem. 4. Reducing crime Reducing the crime rate is top priority for the government. Under the Government Transformation Programme (GTP), reducing the crime rate is one of the 8 National Key Result Areas (NKRA) with a Key Performance Index (KPI). The 2013 NKRA Achievements for reducing crime are: reduction in the overall reported Index Crime by 4.3% (vs target of 5%), reduction in the number of reported house break-ins by 6.5% (vs target of 5%), completion of the development of a new safety perception index that will provide a more comprehensive overview of public perception of safety in Malaysia, increased number of investigation papers brought to trial by 38.2% (vs target of 35%), increased public satisfaction with police front-line performance to 85.7% (vs target of 70%). 5. Policing The Crime Rate Index (CRI) NKRA was established to enhance the effectiveness of Polis DiRaja Malaysia (PDRM) to tackle the growth in crime. PDRM has put in place several initiatives designed to immediately arrest the increase in criminal activity and which has seen promising results that exceeded targets: Index Crime fell 15%, 11%, and 7.6% in 2010, 2011 and 2012 respectively (against a targeted 5%). One of the initiatives was the establishment of the Department of Crime Prevention and Suppression (JPPJ) to better coordinate crime prevention efforts. JPPJ is tasked to carry out both CRI NKRA and National Blue Ocean Strategy. Many of the initiatives feature close collaboration between PDRM, the armed forces, volunteer organisations such as RELA, COPS and NGOs. PDRM also engages with schools, universities, residential associations, business organisations and other NGOs including women’s groups. The objective of the CRI NKRA is to provide holistic intervention with respect to the issue of crime, whilst continuing to engage participating agencies and leverage on their respective strengths. All the issues raised by the letter have been addressed by the government. The letter, obviously, was written with negative preconceived notions. The letter writer’s conclusion that the GST should be postponed until the five issues are addressed is debunked. The GST is a set government policy and should be implemented as scheduled. -gst Malaysia info