Ex-BNM governor: Malaysia needs to relook at existing taxation system

He said an equitable tax system should involve value-added tax and it should not become a political issue for better economic growth.

Muhammad Ibrahim added that this was to ensure Malaysia has the revenue options and refrain from entering into a debt trap over the long run although the country's debt level is still relatively lower, about 50 to 60 per cent, compared to Japan and some other countries with over 100 per cent debt level.

He explained that the implication of the debt trap will not only slow down economic growth but also affect the financial market such as the equity and bond market, which would lead to investors having less confidence in Malaysia.

"As it is now, about 30 per cent of the economy does not pay tax because of the nature of the tax system. "This includes a retired person like me or others who could still afford to spend and should be contributing their part as they still enjoy good roads, airports and schools," he said at the 12th Malaysia-China Chamber Entrepreneurs Conference (MCEC) here today.

He noted that excessive borrowing would turn into negative or less growth moving forward and stressed the importance of national champions' role in various economic sectors.

"We need more national champions like Petronas and Top Glove Corp Bhd to become global brands that not only create high-paying jobs but also advance the interest of the nation," he said, adding that a clear and cohesive plan is needed for regulated entities to become a national champion.

For example, he said BNM was successful in turning domestic-centric banking institutions into regional forces to be reckoned with, and the transformation of the banking sector into a competitive and heavy industry was a long process in nurturing these institutions into entities and competing beyond national borders.

The 12th MCEC combined online and physical facilitating interactions and business matching for small and medium enterprises between Malaysia and China, while discussing further the Regional Comprehensive Economic Partnership Agreement (RCEP).