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Reviving GST will boost economic recovery, says FMM

FMM In The News: FREE MALAYSIA TODAY, PETALING JAYA, Wednesday, January 26, 2022 - Reinstating the goods and services tax (GST) will help strengthen economic recovery, given the weak domestic and external conditions caused by Covid-19, said the Federation of Malaysian Manufacturers (FMM).

FMM president Soh Thian Lai said there were concerns that Malaysia’s debt would increase further to 66% of the gross domestic product (GDP) by the end of 2022, a 5% increase from 2021.

He also noted there were no stable inflows but high outflows of government expenditure instead.

This was, he said, due to a higher allocation this year for Budget 2022 stimulus and recovery initiatives for the country’s recovery from the impact of the pandemic.

“Given the weak domestic and external environment brought about by the pandemic, we believe that priority should be given to strengthen the economy and restore favourable business conditions,” Soh said in a statement today.

In this regard, he said, FMM welcomed the recent announcement by finance minister Tengku Zafrul Aziz on the possible reinstatement of the GST by reviewing the weaknesses of the existing sales and services tax (SST) system, as well as improving upon the former GST system implemented in 2015.

He said FMM supported the GST regime as they were of the opinion that it was a more transparent and effective regime compared to SST.

“Over 160 countries have implemented the GST regime due to its fair tax structure.

“More importantly, prices of Malaysian exports will become more competitive globally as no GST is imposed on exported goods and services, while GST incurred inputs can be recovered along the supply chain,” he said.

Soh said that based on a survey by FMM in May 2020, a total of 499 companies gave strong support for the GST to replace the current SST 2.0.

“Change and transition can be a challenge. FMM, therefore, calls on the government to consult all stakeholders during this review process, which is essential to the success of introducing an effective tax regime,” he said.

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