12MP to cost more, wider tax base on the cards

 

The development expenditure for the 12th Malaysia Plan will cost RM400 billion - up 60.96 percent from the previous 11th plan.

Finance Minister Tengku Zafrul Abdul Aziz said to fund this plan, the government will have to pare down debt and tax more.

"To ensure that there is sufficient fiscal space to fund all the development programmes under the 12MP, the government remains committed to fiscal consolidation measures based on the Medium-Term Fiscal Framework.

"(This is) supported by Medium-Term Revenue Strategy to broaden the country's tax base and increase the government's affordability for its debt commitment," he said.

"Fiscal consolidation" is the fancy term for reducing national debt levels as a proportion of gross domestic product (GDP).

Zafrul explained that the government needs to temporarily increase the statutory debt limit, up from 60 percent of GDP currently, to borrow more.

"Although this will increase Malaysia's deficit target, which is estimated to increase by 6.5 percent to seven percent of GDP in 2021, the government remains committed to fiscal consolidation measures in the medium term," he said.

The enactment of a Fiscal Responsibility Act will help to improve governance, transparency and accountability of the country's fiscal management, he said.

The statutory debt to GDP limit was 55 percent during the Najib Abdul Razak administration and increased to 60 percent during the Muhyiddin Yassin administration due to the Covid-19 pandemic.

The 12th Malaysia Plan is a five-year economic and social development plan.

For a summary of the 500-page document, please click here. - Mkini