Don't rely on monetary policy to push for growth, says ex-BNM deputy governor

With more than a week to go before the tabling of Budget 2020, former Bank Negara Malaysia (BNM) deputy governor Lin See Yan said that Malaysia needs a fiscal policy to generate growth for its economy.

The country, according to him, could not depend on monetary policy.

"This is especially so when interest rates are getting lower and lower, and the effect of the monetary policy gets less and less effective. So, you need fiscal policy to counter (in terms of) development spending as that is important. We need that," he said recently.

Lin said Malaysia has reached a stage where the country is called a 'sugar high' economy with a monetary push for growth.

"Sugar high is good for the economy for a year or two. It doesn't solve your problems and we cannot depend on monetary policy to push growth," he said.

On Budget 2020, Lin is of the opinion that the middle class in Malaysia requires further tax relief.

"I'm a champion of the middle class. If you look at it in an overview - at yield, income tax - the middle class doesn't pay as much as the rich, but the middle class pays a lot of other taxes in the form of import duties and sales tax.

"The economy depends on your (middle class) spending but the more you (middle class) spend, the more taxes you pay; however, it is an illusion - you think you're paying less tax," he said.

Lin added that the middle class is paying more tax because the upper class goes abroad, and does not pay taxes in Malaysia.

- Bernama