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Taxes (GST) are not popularly accepted by the citizens but taxes are the very reasons why we have managed to stay alive when faced with a shocking decline in the oil prices. Malaysia has managed to reduce its income dependency on oil from 40%++ to 14%++. This reduced reliance on oil, coupled with the extra revenues from taxes helped dampen the sad story and provide the light at the end of the tunnel.
THE FINANCE MINISTER 2, Dato' Johari Ghani, gave a reassuring speech today at the Securities Commission (SC) when opening the International Fund Forum 2017 as well as launching Malaysia's Islamic Fund and Wealth Management Blueprint. Johari happily shared that with the Malaysian Gross Domestic Product (GDP) growth forecasted at 4% for 2017, we are set to experience the second part of the hockey stick curve.
This is supported by various other indicators such as the low inflation rate of 1% as well as the low unemployment rate of 1% that will boost consumption expenditure resulting in an upward spiral of the economy. This was further reinforced by the uplifting of a huge portion of the population from the poverty level of B40 into the M40 category as minimum wages are hightened. Whilst the Ringgit is weak, it is conducive for expansionary mode for our export markets. This will also contribute to the upward spiral.
Taxes are not popularly accepted by the citizens but taxes are the very reasons why we have managed to stay alive when faced with a shocking decline in the oil prices. Malaysia has managed to reduce its income dependency on oil from 40%++ to 14%++. This reduced reliance on oil, coupled with the extra revenues from taxes helped dampen the sad story and provide the light at the end of the tunnel. Lest we forget, the taxes referred to here is very much a function of the newly consumer and broadbased tax, the GST.
Looking back at the 2017 Budget that was announced by Prime Minister Dato' Sri Najib Razak late last year, the Government has provided various initiatives to boost the economy particularly in encouraging more skilled based workforce for the nation as well as inviting the private sectors to inject investments into the equation. The Government had also put aside their share of investments via the commitment for continued infrastructure developments such as the Mass Rail Transport (MRT), roads, schools, rails and hospitals.
The SC had reported that Malaysia saw RM100 billion worth of capital raised for 2016 and expects the same for 2017. This is on the back of our leading profile as the primary Sukuk issuer in the World. With this capital market position, we are balancing our cashflows even when it takes a while for foreign investors to re-enter Malaysia. The one factor that, perhaps, needs to be looked at would be the positive attitude from market sentiment perspective.
Whilst many feel good factors can be initiated, the attitude of fellow citizens do require a restructuring emotionally in order to move the herd into a positive direction. After all, the World Bank has given good comments on our Economic Transformation Programmes (ETP) that started in 2010. In fact, many countries are consulting our experts to emulate the ETP. To add on, we are included in the Emerging Markets group, i.e. the more preferred group nowadays as Europe and other Developed Nations experience low growth.
Notwithstanding Trump's dislike for international trade cooperations via the proposed Trans Pacific Partnership Agreement (TPPA), we are set to move globally when we made new trade collaborations with the biggest economy, China. In any case, the United States of America (USA) has more foreign investments in China than China has in the USA. Like it or not, the capital owners in the USA will not ignore China despite the contrary view by their President. After all, China has increased their contribution to the World export market from 5% to a massive 15% recently. For that, Malaysia has put its bet on the favourable side of the Roulette table.
So, with all this, we hope for a prosperous 2017. Happy Living everyone.
* kopihangtuah
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