New BNM Governor views introduction of GST, subsidy rationalisation as bold move

The introduction of the Goods and Services Tax (GST) and subsidy rationalisation are viewed by the new Bank Negara Malaysia (BNM) Governor, Datuk Muhammad Ibrahim, as a bold move taken by the government to face the global economic uncertainty, Prime Minister Datuk Seri Najib Razak said.

He said this was conveyed to him by Muhammad during a recent discussion.

Najib, who is also the Finance Minister, added that the central bank Governor was of the opinion that if the steps had not been taken, the country might have faced the same fate as Greece.

Muhammad was named the eighth BNM Governor, effective May 1. He replaced Tan Sri Dr Zeti Akhtar Aziz who retired after being at the helm for 16 years.

Najib said if RM40 billion was removed from the national revenue annually, it would have serious implications for the country.

"So, the GST introduction, although resulting in a small increase in the prices of goods, essentially strengthened and enlarged the revenue base for the government and the country," he added.

Najib was speaking at the monthly gathering of the Prime Minister's Department here today.

He said the introduction of the 1Malaysia People's Aid (BR1M) and flexibility in taxation, including 'zero-rated' items under the GST, shielded the people from the impact of implementation of the new tax regime.

"Although during the recent Sarawak State Election, the opposition had made the GST an issue, it seems the people are becoming more by day, understanding, and see the move as appropriate and right for their future well-being," he added.

Najib said with the global economy facing a drastic fall in crude oil prices and other commodity prices being at a low level, the government was still able to implement various programmes for the people.

"We are also able to look after the welfare of civil service officers, including handing out a definite one-step special rise in salaries from July 1, as well as implementation of a higher minimum pay," he added.

Meanwhile, the prime minister, urged all sectors, including small and medium enterprises (SMEs) to improve their respective productivity.

"We registered 2.3 percent in the country's productivity under the 10th Malaysia Plan. We cannot just continue with this achievement as under the 11th Malaysia Plan, we have targeted productivity at 3.7 percent," he said.

Najib said members of the administration and the civil service must look at the policy or action to be taken to encourage the private sector and SMEs to enhance productivity.