KUALA LUMPUR – The previous government made a grave mistake by abolishing the Goods and Services Tax (GST) implemented by the Barisan Nasional (BN) government earlier.
The Member of Parliament of Pekan, Datuk Seri Najib Razak said that the abolishment had given a huge impact especially when the country was battling with the Covid-19 pandemic.
In the efforts to fight the spread of the virus, the Saudi Arabian government increased their GST from five to 15 percent, meanwhile, Indonesia will be raising their GST from 10 to 11 percent next year, and 12 percent the following year.
He further cited Singapore and said that the republic will be increasing their GST from seven to nine percent next year.
“I don’t think that countries like Saudi Arabia, Indonesia and Singapore did not make thorough research or are acting cruel while implementing those measures.
“Unlike in this country, when the BN government was trying to increase the national income to help the people, the opposition and its enemies said that the country has gone bankrupt,” he said during the Dewan Rakyat sitting.
According to Najib, when the Pakatan Harapan (PH) began to rule and revoked GST, they sacrificed the long-term interest of the country by selling several national assets.
Following that, the PH government had to depend on the income from oil to mange national expenses, causing the assets and reserves of Petronas to deplete every year.
“After the fall of PH, the new Perikatan Nasional (PN) government took over the administration and executed the half-cooked lockdown and the longest Movement Control Order (MCO) in the world to manage Covid-19,” said the former Finance Minister, adding that the Budget 2022 tabulated last Friday was the biggest budget in national history with a high deficit.
Nevertheless, he highlighted that it is risky for the government to borrow more funds when the income projection of the government is still low.
“To me, such situation was caused by several wrong decisions taken by the governments formed after GE14 and the current government needs to bear the cost.
“Under the previous BN government, the deficit and national debt ratio was reduced eight years consecutively. During the first quarter of 2018, the debt ratio to GDP was successfully reduced to 48.7 percent.
“However, the debt ratio increased again each year since 2018 and it reached 62 percent at the end of last year and it is expected to exceed 66 percent soon after the debt limit was raised twice from 55 to 60 percent in 2020 and from 60 to 65 percent earlier this month,” he added.
According to Najib, the deficit and national debts would be higher, however, it was assisted by the excessively high amount of dividend taken from Petronas since GE14.
He said, in last August, the Chief Executive Officer (CEO) of Petronas has warned that the ‘forced’ dividends on Petronas has surpassed its profit each year since 2018.
If Petronas earns RM100 each year and at the same time, it needs to pay yearly dividend of between RM120 to RM150, its assets and reserves will deplete from year to year.
The former Prime Minister further said that Petronas had to continuously sell off its assets to pay excessive dividends since 2018, including its stakes in MISC, Petronas Dagangan and Petronas Gas amounting to RM6 billion that were sold on 9 December 2019.
It is followed by its stakes in MISC and KLCC amounting to RM3.04 billion on 10 December 2020 and recently, Petronas sold its gas assets in Azerbaijan amounting to RM9.4 billion.
Therefore, the ratings of Petronas have been downgraded for three years in a row by various international accreditation agencies.
“This means that the government can no longer fully depend on Petronas to support its expenses in the future, thus, reducing one important source of income for the government,” said Najib. -MalaysiaGazette