By Arno Maierbrugger KUALA LUMPUR: Malaysia will most likely have to delay its announced large publicly-funded investment projects because the main source of the funds – the new Goods and Service Ttax – will take 14 months to implement if announced in the budget in October 2013. The tax is meant to broaden Malaysia’s tax base and tackle a fiscal deficit that has widened to US$4.5 billion (RM13.5 billion), as well as a shrinking current account surplus which fell sharply to US$780 million (RM16.40 million) in the second quarter. There will also be an announcement on subsidy rationalisation soon, the government said. Some large public sector projects might either be reviewed or scrapped. No projects were identified yet, but the US$15 billion (RM45 billion) Mass Rapid Transit (MRT) rail system project will reportedly not be affected. The possible rescheduling refers to projects with heavy public sector involvement, not private sector projects. Malaysia’s annual growth rate picked up slightly to 4.3% in the second quarter. It was bolstered by strong government spending before national elections in May and resilient domestic demand helped by large infrastructure projects. The Malaysian ringgit has lost more than 7% so far in 2013 against the dollar and stocks have dropped nearly 7 slots from their peaks in mid May amid a global emerging market sell-off. This report first appeared in investvine
Posted on: Sun, 08 Sep 2013 08:42:06 +0000
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