A few worrying statements coming out from new Govt over past week

Hasnah Rahman

1. Tun M: Do not worry if Malaysia’s credit rating is downgraded

Why we should worry: A downgrade of our credit rating will lead to foreign investors pulling out of our share market and bonds market. This will also increase interest rates which means the country’s debt repayment cost will increase by RM10 billion per year while ordinary citizens will be hit with higher interest rates.

2. LGE: Our national debt is now RM1 trillion

Why we should worry: This is a political statement and is not true. LGE lumped our official debt together with lease payments and contingent liabilities – a move which does not comply with international standards and is inaccurate. Not only will this scare the financial markets which had contributed to our stock market dropping like a stone for days on end and our Ringgit weakening, it may be used as an excuse for PH not to deliver on its manifesto promises.

3. Tun M: The decision to cancel the HSR project is final. Singaporeans tired of their PAP govt

Why we should worry: The HSR project was one of the reasons why international agencies increased our GDP growth forecasts. Cancelling this project may mean that our GDP growth forecast will be lowered, leading to more investors scrapping plans to invest in Malaysia.

Also, the confrontational statement against Singapore and the lack of respect in unilaterally cancelling the HSR via a press conference without informing Singapore govt first can only lead to unfavourable policies by Singapore – to victimize Malaysians who work there or trade policies that are detrimental to us.

4. Ong Kiam Ming (special officer to MOF): To replace GST, we will be raising corporate taxes, ask for higher dividends from Petronas, BNM and Khazanah. Sales and Service Tax (SST) base will be expanded

Why we should worry: Increase corporate taxes at a time when our neighbours such as Thailand and Indonesia has been aggressively reducing theirs will drive away investments. Where would you rather build a new factory or start a new company? A country with higher corporate tax or a lower one?

Raiding Petronas and depending on higher oil prices which the previous BN Govt had avoided is never a good thing as global oil prices is out of Malaysia’s control. It will also starve Petronas of funds to invest in new upstream/downstream investments where the effects will only be seen 10 years or 15 years down the line.

Similarly, raiding BNM and Khazanah for funds is also not a sustainable measure. How many years can you raid them? Surely it is not a renewable source of income. Does it also mean that BNM will have to print more money which will cause inflation and devalue our currency?

The part about expanding the SST base is also worrying. GST was able to collect more money compared to SST as GST had covered more goods and services that SST did not cover.

However, expanding the SST base means SST will also cover more items – meaning prices for more items will increase in price since SST is 10% while GST is 6%.

We are back to square one in terms of cost of living!! With the only difference being we no longer know how much tax is collected on the items we buy since SST is hidden while GST charges were transparently shown in our receipts.

Folks, we have to be mindful of what is happening to our country. Changing to a new govt that we wanted does not mean we have to let our guards down.

At the end of the day, it is our purchasing power, our jobs, our investments, our economy and our futures at stake here – no matter who the govt is.

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