World Bank gives thumbs up to Malaysia's subsidy rationalisation plans

Malaysia's shift to targeted subsidies with its subsidy rationalisation plans and upcoming implementation of the Goods and Services Tax (GST), is a good policy that will benefit those who really need them, said World Bank Country Director Ulrich Zachau.

"What Malaysia is doing in terms of reducing untargeted subsidies and moving towards the improvement of targeted subsidies, is a good policy.

"Many beneficiaries of subsidies don't need them, they are going to lose those perks while people really in need will continue in getting them," said Ulrich, who is based in Bangkok and oversees Malaysia, Thailand, Cambodia, Myanmar and Laos markets.

He said this to reporters after attending a World Bank seminar to shed light on its "World Development Report 2014" here today.

According to Bank Negara Malaysia's Assistant Governor, Marzunisham Omar, continued fiscal reforms would ensure that the country can sustain its growth beyond only one to two years.

"Fiscal reforms will offer necessary buffer and financial resources to lessen the impact of a financial crisis, if it were to happen," he said in the seminar.

The latest "World Development Report" shows that Malaysia had done well in terms of preparedness for risks, as well as tackling macroeconomic and financial risks, according to Ulrich.

Locally, Malaysia has the challenge of facing a higher household debt compared to other countries, but it wasn't a concern that would trigger immediate financial crisis, he said.

"Malaysia is still in a good position to continue its robust growth rate," he said.