Jul 6, 2013

Najib Razak on the Threat to the Economy and the Election

"Need to introduce Goods and Services Tax to improve government revenue."

Mr Najib was speaking during a visit to London, made as his government is settling back into office after the ruling United Malays National Organisation overcame the biggest-ever challenge to its power in May’s parliamentary elections. The opposition won 51 per cent of the vote, but Umno and its partners in the ruling coalition secured 60 per cent of the seats under Malaysia’s constituency-based voting system.

The prime minister pledged to accelerate economic reforms and show that the country could be modernised “from within” the existing political framework – a riposte to the opposition’s election claims that Malaysia needed a change of leadership after decades of unbroken Umno rule.

He said: “I want to prove the point that we can make changes from within. We can transform the government and the economy, as well as democracy in Malaysia.”

He was relaxed about the external challenges to an economy that has weathered global turmoil well, with economists expecting gross domestic product growth of about 5 per cent this year, after 5.2 per cent in 2012.

Other domestic economic concerns remain. The government had to cut its bill from fuel and other subsidies and Mr Najib said he believed “we do need to introduce [a goods and services tax] to improve government revenue”. Household debts – at 82 per cent of GDP – were also unsustainable and had to be reined in, he said. “People willy-nilly borrow for consumption. Civil servants willy-nilly borrow for consumption and then wonder why they don’t have enough money at the end of the month.”

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