Madani Economic Reforms Earn 50 Score From Khairy

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 The ex-minister points to three key areas that demand changes: widening the tax base, rationalising subsidies and pension reforms.
The number of people who pay taxes in Malaysia is disproportionately smaller than our peers, said Khairy Jamaluddin. (Bernama pic)PETALING JAYA: Former minister Khairy Jamaluddin has given the Madani government a 50% score for its performance on structural economic reforms since its formation in November 2022
Khairy pointed to three key areas that he believed demanded changes – widening the tax base, rationalising subsidies and pension reforms.
He said the unity government has yet to carry out meaningful tax reforms to widen its revenue base, which he added was significantly lower even compared with peers in terms of gross domestic product.
“The number of people that pay taxes in Malaysia is disproportionately smaller than our peers, and that creates a problem for the government because your revenue base is too small. That’s why we introduced the GST (goods and services tax),” he said, referring to the tax scheme introduced by the Najib Razak government in 2015.
He pointed out that the planned expansion of the sales and service tax has been repeatedly delayed, while maintaining that a consumption tax like the GST was the way to go. (Government figures show that GST raised RM43.8 billion in 2018, while SST for 2024 is estimated at 44.7 billion)
On subsidy rationalisation, Khairy said the biggest hurdle was targeting the RON95 petrol subsidies, which cost Putrajaya RM20 billion in 2023.
The former Rembau MP said the last major reform needed was pension reforms, which is expected to balloon to around RM30 billion in the next decade.
“And it’s going to rise because of the number of civil servants retiring, and life expectancy has also gone up,” he said, adding that the solution was getting rid of pensions for new government hires and shifting to EPF contributions.
“So if out of three big structural reforms, it’s one and a half. So it’s 50%,” he said in an episode of the Game of Impossible podcast with former minister Idris Jala and his son, Leon.
The government is set to implement targeted subsidies for RON95 in the second half of the year, though details have not been released yet.
Putrajaya has also announced that new civil servants would no longer get pensions but would contribute to EPF and the Social Security Organisation.
Khairy reiterated that these reforms were important to ensure the country had enough funds for public services like health, education, and transport. “You don’t have enough money to make all the changes you want,” he said. - FMT

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