SINGAPORE (May 25): Malaysia’s decision to zero-rate the Goods and Services Tax from June 1 is widely expected to provide a small boost to consumer sentiment. Last year, GST revenue was RM44.3 billion ($15 billion) — equal to 3.3% of Malaysia’s GDP.

The government is expected to bring back a Sales and Services Tax, which was abolished to make way for the unpopular GST. But the SST generated less revenue — equal to 1.6% of GDP before it was replaced.

However, DBS senior economist Irvin Seah cautions that consumers may not necessarily frontload their expenditure in response to a permanent tax cut. And there may be some negative spill-over from the government’s efforts to reduce spending in order to make up for the shortfall in GST revenue.

To continue reading,

Sign in to access this Premium article.

Subscription entitlements:

Less than $9 per month
3 Simultaneous logins across all devices
Unlimited access to latest and premium articles
Bonus unlimited access to online articles and virtual newspaper on The Edge Malaysia (single login)
Related Stories

Stay updated with Singapore corporate news stories for FREE

Follow our Telegram | Facebook