Malaysia in Global Ratings: Position and Dynamics

Abstract

The abolishment of Goods and Services Tax (GST) has had the effect of reversing an initial success in broadening the country's tax base. In contrast, the abolishment of GST has had the effect of reversing an initial success in broadening the country's tax base. Moreover, the government has a better capability of managing debt than the private sector due to its central bank with fiat money. However, Malaysia's total reserves have not increased significantly in recent times, despite the trade surplus, given the movement in the financial accounts. In such circumstances, it is incumbent on the government to expand its balance sheet to pick up the slack of the private sector. Hence, the reform agenda has restored Malaysia's image globally. More importantly, a reminder from the great recession of 2008 is that the private sector, when faced with great uncertainty, cannot continuously provide employment. However, before policymakers ponder to the views of rating agencies, they need to consider the points above and debate among themselves about what is truly in Malaysia's best interest. As the matter of fact, manufactured goods accounted for some 86% of Malaysia's total exports. We see no conflict of “crowding out” if the government and government-related companies take on radical risk that the private sector is unwilling or incapable of taking on. In fact, manufactured goods accounted for some 86% of Malaysia's total exports. It is important that policymakers understand that the government's deficit is the private sector's savings. The direct cross-shareholdings of government linked corporations (GLCs) and its resultant crowding-out of private investors have received heightened policy priority by the government where major reshuffled on the reporting lines of various GLCs by ministries contributes cross-shareholdings of GLCs and its resultant crowding-out of private investors.

Citation

Hamid, K.A., Badlishah, S. and Jaaffar, A.R. (2021), "Malaysia in Global Ratings: Position and Dynamics", Sergi, B.S. and Jaaffar, A.R. (Ed.) Modeling Economic Growth in Contemporary Malaysia (Entrepreneurship and Global Economic Growth), Emerald Publishing Limited, Leeds, pp. 127-134. https://doi.org/10.1108/978-1-80043-806-420211011