Category
📺
TVTranscript
00:29Don't go anywhere.
00:30Money Matters starts now.
00:56Welcome and thanks for joining us on TBT Gas flagship business program.
00:59Money Matters, I'm Azaria Tagaya, your host for this episode, and we're joined this week
01:03by Lee Hengjui, the executive director of the Socioeconomic Research Center.
01:10Thank you, Azaria.
01:12Well, we appreciate you making the time to speak to us about the upcoming tabling of the
01:16budget this week.
01:17And as I said earlier, the upcoming budget is going to be about recovery and helping
01:22the people, building their livelihoods, and also SMEs, which were hardest hit.
01:27Now, what do you think is the type of focus that will be required or should be the focus
01:33of the 2022 budget?
01:36Okay, thank you.
01:36I expect the Minister of Finance to table a pro-recurray and transformational budget 2022 on October
01:4429.
01:44Basically, I think this budget will focus around how to build the recovery, how to sustain the
01:50economic resilience, and how to reform for long-term sustainability of the growth.
01:55And I think the budget will adopt a more targeted approach of spending program to support the business
02:02economy post-pandemic recovery.
02:04And there will be some areas of focus which require further support coming from the budget.
02:10And the whole thing about this budget, I think the immediate priorities will be rebuild and
02:16enhance the confidence of the public and the trust that based on four pillars, that will
02:23be the clear communication, integrity, transparency, and engagement.
02:29And the other priority is to secure a strong business economic recovery to provide more fiscal
02:36and financial provision and assistance to different sectors which still need support from the
02:44government and also from the financial side.
02:47I think the first one, like the vulnerable groups, should be continued to give continued cash
02:52subsidy.
02:53Some tax rebate, including for the business, maybe the continued waste subsidy, okay, and
03:00also the rental rebate, and also some training, reskilling, and some innovative financial mechanism
03:07to support the micro and the SME in those sectors which are still badly hit, supposedly like the
03:16tourism industry.
03:17tourism industry, retailing industry, aviation industry, though Malaysia has started to
03:23interstate, lifted the incentive travel, but I think this sector still require a lot of
03:31support from the government.
03:32And lastly, on the medium term, the reform initiative will focus on how to sustain the long-term stability
03:41of the country in terms of economic resilience that required the government to continue to give some
03:49tailor-made incentive to support digitalization, automation, to increase our productive capacity,
03:57productivity.
03:58And one of the main areas which I think the budget will focus on is to promote green investment agenda
04:05and also go towards the ESG, the environmental, social, and governance business practices, to encourage
04:13us to go towards more green, more sustainable method of doing business post-pandemic.
04:20Okay, so we see, we can see that banks and financial institutions will play a critical role moving forward.
04:27How do you think they will be able to help businesses, especially in business continuity, as well as
04:34jump-starting businesses?
04:36Yes, I believe so.
04:37I think the Bank of Ngarra, together with all the financial institutions, including the DFI, they will
04:43proactively continue to provide financing assistance to those industry or company, be it as micro or SME,
04:52they are still distressed.
04:54There are wider sectors that need to be continued to be given financing support so that they can
05:00more better prepare post-pandemic recovery.
05:03We realise that there are so many distressed borrowers down there in the market, and some
05:07of them may not be able to get the financing due to more stringent criteria adopted by the banks.
05:15And if you go by applying the traditional criteria of approving and processing the loan
05:20to find a wider sector or company to support, you may deny a lot of all these distressed borrowers
05:27from getting the financing.
05:29So I think on this part, I believe the budget will continue to focus on giving the required
05:35assistance, financial mechanisms, targeted funds with low interest rate to support industry
05:43towards the recovery path.
05:44And on this front, I think we need to be more creative in terms of assessing the loan
05:50requirement, the financing requirement by the company.
05:55What I call is more innovative financial instruments.
05:59It can be debt equity.
06:02It can be also based on your invoice, invoice-based financing.
06:06That will help companies which need continued assistance to support them for further recovery, especially
06:16those sectors which are still very distressed, even though the tourism-related retailing, aviation
06:23industry, and also some small companies or self-entrepreneurs which continue to need some assistance.
06:31Like on this front, I suspect the government will continue to give a targeted loan repayment
06:37assistance for those still struggling sector.
06:41Indeed, indeed.
06:42Now, the focus now is going to be on handling this pandemic as well as at the same time reviving
06:49the economy.
06:49As we move into the endemic phase, how do you think we can handle both of these situations
06:55simultaneously?
06:56Okay, as we are moving towards what we call endemic, you know, like a flu-life endemic
07:03situation, as we are more than 90 percent, the adult population are vaccinated, and for
07:08the total population now is more than 70 percent, finding an elusive balance between saving life
07:15and protecting the livelihood requires affirmative action on all fronts, which means that we need
07:21close cooperation from all segments of the populace.
07:24It is a very total responsibility involving a whole approach of the society and government
07:33to prevent, to make sure that all of us comply with the very simplified SOP, recovery SOP.
07:42So on the healthcare side, I believe the government must continue to maintain what we call FTTIS,
07:49fine trace, what we call the isolate and support approach to get all the, our current healthcare
07:57system fully prepared.
07:59And also that we, based on the data, based on the scientific data and also the technology,
08:06so we are fully prepared should there be any resurgence of the new cases.
08:12So these are the approach that I believe the government will adopt as we move towards what
08:17we call endemic phase, where you allow more reopening and safer reopening of the economy.
08:24Yes.
08:25Indeed.
08:26Now, Lee, we have more to talk about the upcoming budget.
08:29Of course, we want to talk a little bit about tax and what we can expect in the tabling of
08:34the 2022 budget.
08:35But hold that thought.
08:36We're going for a short break.
08:38We'll be back after this on Money Matters.
08:40Don't go anywhere.
08:41We'll be back after this on Money Matters, so don't go anywhere.
09:11.
10:41Lee Heng-Jui, the executive director of the Socioeconomic Research Center, or SERC.
10:47Lee, now, before the break, I talked to you a little bit about tax.
10:51Now, the OECD has recommended that Malaysia consider introducing the GST 2.0 to actually overcome its fiscal deficits.
11:00Now, is this the right time to introduce the GST 2.0?
11:04Or perhaps should we wait a little bit later, perhaps in 2023 or 2024?
11:09What do you think?
11:10Okay, I think you look at the Malaysia current tax is quite narrow, yeah?
11:16And we face fiscal constraint, which is, that's why we have a limited fiscal space to support the recovery.
11:24And during the pandemic, we had to really raise our debt ceiling in order to support the large amount of the funds needed to support the,
11:34to mitigate the impact from the pandemic.
11:37So, looking at the current situation as we are still, you know, nursing the recovery,
11:44I believe the timing of the introduction, reintroduction of GST likely not happen in the coming budget.
11:51And perhaps in the coming budget, Minister Finance can make a policy statement about the timing of reintroduce a GST,
12:00a broad-based consumption tax, in order to rebuild our revenue buffer against the potential funds that are needed,
12:11should there be another crisis down the road, given that our expenditure remains high and our revenue base is too narrow.
12:19So, I think becoming budget, most likely there will not be a reintroduction of GST.
12:26But I personally hope that Minister Finance can put a statement, a statement of content, the intent of reintroduce it,
12:35maybe perhaps in the year 2023.
12:38But that also depends on the, what I call, concern.
12:42I mean, I believe there's some may concern about the political backlash, you know.
12:46But if we can manage it properly in terms of implementation, we can start a very low GST, about 4%,
12:53compared to last time when we introduced it was 6%, and slowly increase when the economy is getting stronger,
13:00or our income has improved.
13:02And most important is to manage the inflation expectation coming from the reintroduction of GST,
13:07and also to make sure, make sure those low income will not be badly affected.
13:13You have more items will be exempted.
13:17And the other thing for the business side, you must have a very good refund system for the GST.
13:22I think the concern that we had last time was the refund was a bit slow,
13:27and that had impacted on the cash flow of the small businesses.
13:30Yes. Now, the government has said that now is not the time to revisit the tax issue.
13:36But with the, during the pandemic, during COVID-19, there's been a lot of talk about windfall tax,
13:40because certain businesses have been making more money than others.
13:44And also, we have the capital gains tax, or perhaps any other tax that you think should be considered.
13:50Okay, I think, as I mentioned just now, the focus now is to support the recovery,
13:55to facilitate the recovery, okay?
13:57And most important, what the objective now is to make sure that this is back to more solid,
14:05I mean, sustainability of recovery, and also revital investment.
14:10So, exploring options of new tax, okay, in the aftermath of the crisis,
14:16or during recovery, you need to be carefully timed, okay?
14:21Okay, why?
14:22Because if you introduce a new tax in this nature of a capital gain tax,
14:28whether on share or other asset classes, including what you mentioned about the windfall tax,
14:34that would make, that would hurt the investor sentiment,
14:38and dampen the investor decision to invest in Malaysia on a long-term basis.
14:43And in particular, like all this capital gain tax, assuming it's on tax or on shares,
14:47it would make Malaysia less competitive in terms of capital market,
14:52and it would be counterproductive for those genuine long-term investors
14:56who want to invest and build capital stock formation to increase their production capacity.
15:03And all this will have to be carefully studied,
15:06and I believe Minister of Finance, Ministry of Finance has set up a committee,
15:11and in fact, they've given some consultation paper to the industry to get some feedback.
15:18And I think a careful study needs to be conducted in terms of benefit,
15:25impact on the overall economy, impact on the capital market,
15:29whether they'll be concerned about capital flight, more long-term outflow,
15:33and it may also kill the spirit of entrepreneurship, you know,
15:38for young startups who want to grow.
15:43And with all this capital gain tax,
15:47it may cause them to, what's called,
15:51to kill their intentions to grow the new business investment.
15:58Okay, now, the pre-statement of Budget 2021
16:00has actually called for a review of the government's tax treatment,
16:03to curb revenue leakage.
16:05Now, this has been a familiar topic at each national budget,
16:08curbing revenue leakage as well as harmful practices.
16:11Now, how do you think more emphasis can be given to this?
16:15Okay, there are three things here.
16:16If you read the 2022 pre-budget statement,
16:20it mentioned three aspects.
16:21One is to minimize, you know, fixing the revenue leakages,
16:26strengthening the tax compliances,
16:27and also review the investment incentive.
16:30These are three aspects of the focus,
16:32of the revenue focus, strategy focus.
16:35And I believe some of the measures will be taken along the way.
16:39One aspect is to reduce the cross-border tax leakages, you know.
16:46Mainly, you look at the OECD,
16:47they have been working on something called base erosions
16:51and profit-sharing type of system.
16:55Not profit, sorry, profit-shifting.
16:57I repeat again, base erosions and profit-shifting.
17:01This is some form of tax planning strategy
17:04where multinational,
17:06they take advantage of all the,
17:08what are called the gaps and mismatches
17:10in the tax rules to avoid paying tax.
17:13So these are areas which I think the Ministry of Finance
17:16can work on that
17:17and how to plug some of the leakages.
17:21And second aspect,
17:23which is called the Special Voluntary Discrocial Program
17:27for Indirect Taxes.
17:29So indirect taxes here refers to import duty,
17:32excise duty, and SST, okay.
17:35And this combined,
17:36they contributed to close to 17.3%
17:39of the total tax revenue,
17:42total revenue in 2019,
17:44which is about close to 45.8 billion.
17:47So this is area where you can
17:49plug some of the,
17:50what I call the leakages
17:51to the smuggling activity
17:53in the tobacco products, okay,
17:55or counterfeit products,
17:57or maybe ask them to come forward
17:58to a voluntary disclosure
18:00of some of the tax leakages, you know.
18:03So if you recall back in 2018,
18:06budget time,
18:08and the then Minister of Finance
18:10also introduced a special
18:11voluntary disclosure program
18:13for personal and corporate income tax,
18:16if you can recall back.
18:17So during the period
18:18between November 2018
18:20to September 2019,
18:23the government managed to
18:24get extra revenue
18:27close to 7.88 billion taxes
18:30to the government coffer.
18:32So I think hopefully
18:33this will have some effect,
18:35you know,
18:35with this voluntary disclosure program
18:38for the indirect taxes
18:39that will help to bring in
18:41some extra money
18:42for the government.
18:44And I also believe
18:45they will introduce two things here.
18:46One is to introduce
18:48a tax compliance certificate
18:50as a precondition
18:51for those who want to tender
18:53and participate
18:54in the government procurement project.
18:56So that tax compliance certificate
18:58will have a base for them
19:01to trace some of the,
19:04to minimize some of the tax evasion payment.
19:08And the last one
19:08is to introduce or implement
19:10a tax identification number.
19:13That is to make sure
19:14that everyone must be registered
19:17and must be fulfilled their duty
19:21to pay tax.
19:22Yes, indeed.
19:24Curbing revenue leakage
19:26as well as rebuilding
19:27the economy towards recovery.
19:29We will be talking more
19:30about that after this.
19:31But now it's time
19:32for another short breather.
19:34Don't go anywhere.
19:35Money matters.
21:52Thanks for staying with us
21:55on Money Matters.
21:56You're still with me,
21:57Azaria Tagaya.
21:58And we're still with our guest,
21:59Lee Hengjui,
22:00the Executive Director
22:01of the Socioeconomic Research Center,
22:03SERC.
22:04Lee, now let's talk a little bit
22:06about the tourism sector.
22:08Now, to attract more tourists,
22:10a lot of hotels will need
22:12to upgrade their facilities
22:13and also to help boost tourism
22:15for their places of business.
22:18So what type of incentives
22:19can be offered to hotels
22:21to actually help them do this?
22:23I think before we talk
22:24about incentive,
22:25I think first,
22:26most important priority now
22:27is to, for the hotelers,
22:29for the tourism industry
22:30to provide clear information
22:33about safety to travel Malaysia
22:36and safety to stay in the hotel,
22:38the accommodation,
22:39whether it's a homestaying or hotel.
22:42Most important,
22:43the message must be get across
22:44to all the potential tourists
22:46or business travellers
22:47that are likely to come to Malaysia
22:48and also for the local people
22:50so that you have to regain
22:51the confidence
22:52that when I travel in Malaysia,
22:55I stay in any places
22:56that will be safe,
22:57you know,
22:58meet the basic,
22:59very good standard of health
23:01and also the safety standard,
23:03most important.
23:04Secondly,
23:05in terms of the,
23:06how to give assurance
23:09that when I come here
23:11and I feel very safe,
23:13I think most important,
23:14the Ministry of Tourism
23:15together with the Ministry of Health
23:17to work out some,
23:18with the stakeholders,
23:19the industry player,
23:21to implement health education certificate
23:24that give the assurance
23:26that tourists,
23:28that our tourism facility
23:29fully complies
23:31with the highest health
23:32and safety standard.
23:33So we saw that happen
23:34in Singapore and Thailand,
23:36which they implemented
23:37the health protection certificate.
23:40That's important.
23:41And come to the incentive side,
23:43I think,
23:44I believe the coming budget
23:46will continue to consider
23:48whereas I expect
23:49the cash flow problem
23:51or the financing funding
23:55needed by the industry player,
23:57whether it's the tour operator,
23:59whether it's the tour agency,
24:02whether it's the hotelers.
24:03So I think they need time.
24:04As I said,
24:05it takes quite some time
24:07for the industry
24:08to fully recover.
24:10Yeah.
24:10And that's why we hope
24:12that in the budget,
24:13the government can consider
24:14to extend the exemption
24:16for the tourism tax,
24:17service tax, okay?
24:19And maybe if they can,
24:20extend the electricity bill discount
24:23for the hotelers,
24:24the theme parks
24:25and the convention center,
24:27shopping mall.
24:28And also one aspect
24:30which encourages local people
24:31to spend more
24:32at Chuti Chuti Malaysia,
24:35they can raise
24:35the individual tax relief
24:37to 3,000 from 1,000 ringgit.
24:40That is mainly for you
24:42to spend on the tourism packages,
24:45including the air tickets
24:46or including the hotel expenses
24:49that you can claim
24:51for your tax relief, okay?
24:54And the other potential measures
24:57which they can consider
24:59is to provide income tax exemption
25:02for the inbound tour operators
25:04regardless of the numbers
25:05of tourists they bring in
25:07and also incentivize
25:09the tour operators
25:10who bring in
25:11about more than certain amount
25:14of the international tourists
25:15to give them some incentive.
25:18So these are the potential incentives
25:21which we hope
25:22in the budget,
25:23in the coming budget
25:24will help to rebuild
25:27and rebuild
25:28a more resilient tourism sector,
25:31you know,
25:31and so that they can
25:33fully prepare,
25:35you know,
25:36when the international border
25:38is fully open.
25:39Indeed.
25:40Now,
25:40how can we actually,
25:42for the upcoming budget,
25:43how can we help
25:44to reduce the gap among states?
25:46What type of focus
25:46should be given
25:47to the different states
25:48and what type of focus
25:49should be given
25:49to states like Sabah and Sarawak?
25:51Yes,
25:52I think if you look
25:53at the 12 Malaysia plan,
25:55in the 12 Malaysia plan,
25:56they mentioned
25:56that they are going
25:57to allocate
25:58at least 50%
25:59of the total basic
26:01development expenditure.
26:02What is considered
26:03as development expenditure basic?
26:06These are projects
26:08including construction
26:10of schools,
26:11hospital,
26:12roads,
26:13industrial areas
26:14and poverty
26:15eradication program.
26:18So they are going
26:19to at least 50%
26:21of the basic
26:21development expenditure
26:22will be given
26:24to six states.
26:25And these are
26:25the six states
26:26which are considered
26:27less developed.
26:28They are KEDAR,
26:29Kelantan,
26:30Perlis,
26:30Sabah,
26:31Sarawak
26:31and Terengganu.
26:32So Sabah and Sarawak
26:34will be part
26:34of the allocation
26:35under this
26:37total basic
26:38development expenditure.
26:39And during
26:40the 12 Malaysia plan,
26:41they had budgeted
26:42close to about
26:4315 to 18%,
26:4418,
26:4515 to 18%
26:46will be channeled
26:47to these two states
26:48over the next
26:50five years period.
26:51So I believe
26:51the coming budget
26:52will be slowly
26:53allocated
26:55and to meet
26:56the full
26:57five year plan
26:58between the
26:5915 to 18%.
27:00So with this
27:01additional allocation
27:03on basic
27:04development
27:04expenditure,
27:05that will help
27:06to narrow
27:07the gaps,
27:09you know,
27:09the interstate
27:10between the
27:11rich state
27:12and the poor state
27:13and also
27:14that will also
27:15help to raise
27:16their income
27:16per capita
27:17and also spur
27:18the demand
27:19for goods and services
27:20and help
27:21the local activity.
27:22Because if you
27:23look at all
27:23the basic
27:24development
27:24expenditure
27:24in Sabah
27:26and Sarawak,
27:27they are
27:28quite less
27:29developed
27:30compared to
27:30other states
27:31in Penelope
27:32and Malaysia.
27:33And now
27:34you have
27:34the Pan-Boneo
27:35highway.
27:36With that
27:37ongoing,
27:38eventually we
27:38will see
27:39a better
27:40living standard
27:41for the Sabah
27:42and Sarawak
27:42and that
27:43will draw
27:43in more
27:44investment
27:44in the two
27:45states
27:45and raise
27:46their income
27:47per capita
27:47and increase
27:48their purchasing
27:49power of the
27:50rakyat.
27:50Okay,
27:51now
27:52Melissa
27:53has rolled
27:54out billions
27:54of ringgit
27:55on stimulus
27:56packages
27:56to help
27:57spur the
27:57economy.
27:58On fiscal
27:58management,
27:59how is it
27:59doing and
28:00what do you
28:00think the
28:01direction
28:01will be
28:02for 2022?
28:03Also,
28:04for the
28:042021 budget,
28:05322.5
28:07billion
28:08ringgit
28:08expenditure
28:08was allocated.
28:10What do
28:10you think
28:11the type
28:12of figure
28:12that we'll
28:12be looking
28:13at for
28:132022?
28:15Based
28:15on my
28:16estimates,
28:17I think
28:17the 2022
28:18total
28:19allocation
28:21will be
28:21around
28:22310
28:22billion,
28:23slightly
28:24below
28:24compared
28:25to the
28:25year-high
28:26historic
28:27high of
28:28the 2021
28:28budget,
28:29322.5
28:30billion.
28:31So,
28:32basically,
28:32why I
28:33expect
28:34a lower
28:35total
28:35allocation,
28:36mainly
28:37because
28:37as we
28:39are moving
28:39to more
28:40to recovery
28:41and the
28:42government
28:43spending
28:43program
28:44will be
28:44more
28:45targeted
28:45rather than
28:46broad-based.
28:47Even though
28:48it's targeted,
28:48they also
28:49make sure
28:49that areas
28:50that needed
28:50support
28:51will continue
28:52to be
28:52given
28:52support.
28:53And I
28:54will
28:54expect
28:55the
28:55expenditure
28:56for next
28:57year
28:57will be
28:58around
28:5860 to
28:5965
28:59billion
29:00compared
29:00to this
29:01year
29:01about
29:0168
29:02billion.
29:03And the
29:04special
29:04COVID-19
29:05fund
29:05mainly
29:06to
29:07cater
29:08for
29:09some
29:09special
29:10needs.
29:11That
29:11amount
29:11will be
29:12also
29:12lower.
29:12I'm
29:13looking
29:13between
29:1318 to
29:1420
29:15billion
29:15next
29:16year
29:16compared
29:16to
29:17this
29:18year
29:19is
29:19much
29:20higher.
29:21So I
29:21think
29:21this is
29:22the
29:22stunt
29:22likely
29:23to be
29:23adopted
29:24by the
29:24government
29:25in terms
29:25of
29:26allocation
29:26for both
29:27the
29:27operating
29:28and
29:29development
29:29expenditure
29:30on the
29:31back
29:31of how
29:32much
29:32they're
29:33likely
29:33to
29:33get
29:33from
29:34the
29:35revenue
29:35side.
29:36Revenue
29:36forecast
29:36hopefully
29:37will
29:37slightly
29:38improve
29:38compared
29:39to
29:39this
29:40year
29:41because
29:42of
29:42the
29:42improving
29:43economic
29:43growth
29:44and
29:44also
29:45the
29:45oil
29:45price
29:46will
29:46be
29:46much
29:46higher
29:47based
29:49on
29:49the
29:49assumption
29:50for
29:50next
29:51year
29:51compared
29:51to
29:51this
29:52year.
29:53Well
29:53Lee
29:54thank
29:54you
29:54so
29:54much
29:55for
29:55sharing
29:55with
29:56us
29:56today.
29:56It's
29:56been
29:57a
29:57wonderful
29:57discussion
29:58and
29:58of
29:58course
29:58we
29:59hope
30:00to
30:00see
30:00how
30:00it
30:00plays
30:01out
30:01next
30:01Friday
30:01when
30:02the
30:02budget
30:02is
30:02table
30:03but
30:03unfortunately
30:03that's
30:04all the
30:04time we
30:04have
30:04for
30:04today's
30:05episode
30:05thank
30:06you
30:06so
30:06much
30:06for
30:07joining
30:07us
30:07we
30:07appreciate
30:07your
30:08time
30:08thank
30:09you
30:09Azaria
30:09thank
30:09you
30:10and
30:11to
30:11our
30:11viewers
30:11we'll
30:11be
30:12back
30:12again
30:12next
30:12week
30:13same
30:13day
30:13same
30:13time
30:14so
30:14do
30:14join
30:14us
30:15for
30:15more
30:15money
30:15insights
30:16that
30:16matter
30:16I'm
30:17Azaria
30:17Tagaya
30:18thanks
30:18for
30:18watching
30:19take
30:19care
30:19time