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Malaysia may approve the introduction of a goods and services tax (GST) in March to increase revenue as the government seeks to narrow a budget shortfall, Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah said.

Full implementation of the levy may take about 1 1/2 years after approval as the system’s infrastructure is put together, Ahmad Husni told reporters in Hong Kong, clarifying earlier comments at a conference when he said that Malaysia would “introduce” the tax in March.

“We know very well that the sources of revenue for the government have been dependent heavily on petroleum,” he told the conference. By introducing the consumption tax, “we can have alternative sources of revenue.”

The goods and services tax of 4 per cent is expected to generate an additional RM1 billion annually in revenue, Ahmad Husni said last year.
Essential items such as agricultural products, poultry and livestock products, sugar, rice, flour, cooking oil and eggs will be exempted from the tax, the government has said.

The government is on track to implement a new fuel-subsidy program in May that will be targeted to those in need, compared with an existing plan that subsidizes everyone, Ahmad Husni said today. Malaysia will also unveil a new economic model for the country next month, he said.

The nation aims to privatize as many as 17 state-owned companies this year through initial public offerings or sales to the private sector, Ahmad Husni said. He declined to name the companies or the industries. - Bloomberg

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