Investors are more confident about Malaysia's long-overdue steps to rein in deficit. But to most Malaysians, a string of subsidy cuts and price hikes coupled with the prospect of a new tax, are a worry and many say it's too much to hit the people with at one time.
People say they've already seen prices for essentials rise since the government slashed petrol subsidies in September. And Malaysians are bracing for a lot more of the same.
In the recent months, the government has announced it will introduce a Goods and Services tax starting in 2015. Then more recently it announced increases to electricity tariffs, public transportation fares and highway tolls.
"The next one, two years will be more difficult for the general public. When things are going up, your living standards will drop, that's for sure. And it looks like we are going in that trend," Malaysian resident Puvanathan Sabaratnam says.
Malaysia's government has been running fiscal deficits since the financial crisis of 1998.
"It's important that the government rationalize the subsidies because it now makes up more than half the fiscal deficit and that in itself is not sustainable," Yeah Kim Leng, chief economist of Rating Agency Malaysia, says.
Economists also say that the country's tax base is currently too narrow, with oil and gas revenues providing up to 40 per cent of the government's income.
"This so-called over reliance on the national oil company is actually not prudent. So that's the basis for actually implementing the long-awaited GST," Leng says.
The political opposition, though, say that before squeezing the public for more revenue, the government of Najib Razak has to curb its excesses as exposed year after year in its own auditor general's reports.
"No matter how many new taxes you implement, no matter how new stream of income you bring to the government, unless there is a discipline to get rid of wastages, corruption, to re-look at the procurement practices of the country, it's like pouring money into a black hole," Rafizi Ramly of People's Justice Party says.
Najib doesn't have to call an election for at least another four years, giving plenty of time for any public dissatisfaction to ease and for the government to convince people that all these fiscal measures were in the country's best interests. Rian Maelzer, CCTV, Kuala Lumpur.
Source: CCTV
