PM downplays early polls, cites inflation risk - report

Prime Minister Ismail Sabri Yaakob has downplayed calls for an early election, citing a rise in food prices and other living costs, Nikkei reported today.

An election is not due until 2023 but Ismail Sabri has been facing pressure from some in his party to call an early vote to capitalise on Umno’s resurgent popularity in recent state polls.

The prime minister told Nikkei in an interview that he will wait for "the right time" to call an election, given inflationary pressures partly stemming from the Ukraine conflict.

"We are now facing a period of increasing inflation with high prices... do you think this is the right time?" he was quoted as saying.

Bank Negara Malaysia expects headline inflation to average between 2.2 percent and 3.2 percent this year, with food costs up 4.1 percent in April.

Earlier this month, the central bank unexpectedly raised its key interest rate to cool inflationary pressures.

The government has introduced price control measures, but the cost of subsidies has weighed on its coffers.

Ismail Sabri told Nikkei the government was keen on re-introducing a goods and services tax (GST).

An Umno government introduced the GST in 2015, but it was scrapped three years later by Dr Mahathir Mohamad's administration after voters blamed the six percent consumption tax for rising costs.

Ismail Sabri said the government was aware of the GST's unpopularity, but had limited options, noting it had lost RM20 billion in annual revenue after the tax was abolished.

The government will target a GST rate that would not burden the people, but was not so low that it "defeats the purpose of expanding tax revenue", he told Nikkei.

The government is expected to spend RM28 billion on fuel subsidies alone in 2022, more than double the RM11 billion spent last year, in addition to subsidies for cooking oil, sugar, and flour.

- Reuters