Malaysia will devise new taxes soon to shore up a state budget that’s been constrained by debt and changes to the consumption levy, Prime Minister Mahathir Mohamad said on Oct 9, as his administration struggles with liabilities of around one trillion ringgit (S$333 billion).
The government may also have to sell assets to raise money to pay “huge debt,” he said at a forum in Kuala Lumpur, adding that he believes foreign investment will still come and contribute to the nation’s economic growth. The new measures will be announced as part of a budget speech planned for Nov. 2, Finance Minister Lim Guan Eng said at the same forum.
Dr Mahathir, who unexpectedly won a general election in May, has blamed the previous administration of Najib Razak for taking the country into such heavy debt, including that of the 1MDB state fund, which is the subject of corruption and money laundering investigations in Malaysia and other countries.
The government is also looking for new sources of revenue to make up the shortfall it is expected to face after scrapping an unpopular goods and services tax just weeks after the Mahathir-led Alliance of Hope coalition was elected to government.
Malaysia is turning to additional bond issuance and sales of assets, including stakes in “non-critical, non-strategic companies” to raise funds to meet its fiscal deficit target of 2.8 percent of gross domestic product this year, Finance Minister Lim Guan Eng said in August.
“We may have to devise new taxes in order to have the money to pay our debts,” Dr Mahathir told an investor conference.