KUALA LUMPUR – The government has had to make some “hard” decisions, such as removal of fuel subsidies and introduction of the Goods and Services Tax (GST), to enable the country to achieve a balanced budget.
“As per our targets, we are confident of reaching a balanced budget, or as close to that as possible, by 2020,” he said in his speech at the Global Transformation Forum here, Wednesday.
In achieving the target, Najib, who is also the Finance Minister said some hard decisions had to be made, including the removal of fuel subsidies and introduction of the GST in April this year.
Both, he said, were among the toughest measures the government had undertaken to promote competitiveness and increase the tax base significantly.
“Not everyone is happy with these moves. But the measures are necessary for us to continue our transformation.
“There is a need to re-strategise to keep the nation’s objectives and ambitions intact and maintain the long-term vision for Malaysia, amid the current global economic headwinds,” added Najib.
He said the decline in oil and commodity prices, an inevitable rise in US interest rates and devaluation of the Chinese Yuan, are all tough for an outward-facing trading nation such as Malaysia.
“Investments are thinning. There is increased competition for global investors, and our economy is in danger of getting caught in a middle-income trap. There is a need to reignite the engines of growth,” he added.
Najib said Malaysia needs to escape the middle-income trap if the country is to have any hope of achieving high income status by 2020.
“We have to pursue growth, while removing inefficiencies, but without compromising on standards of living. We needed transformation,” he said.
Najib said Malaysia’s fiscal deficit had seen a positive annual momentum since the beginning of the National Transformation Programme (NTP) in 2010, in falling to 3.4 per cent last year, as compared to 6.7 per cent in 2009, when it began.
He added that new achievements in terms of the fiscal deficit would be revealed in Parliament on Friday when the Budget 2016 is tabled.
The NTP, which comprises the Government Transformation Programme (GTP) and Economic Transformation Programme (ETP), has helped in making significant strides in addressing rural development, urban public transportation and assisting low income household.
“These are right at the heart of our transformation, because it must be sustainable and inclusive. We want all to share in it, regardless of age, location, faith or ethnicity, because it is a transformation for all Malaysians,” Najib said.