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Malaysia
This Week in Asia

Think GST is hurting India’s Modi? Look at Malaysia

Malaysia’s opposition vows to abolish the levy if victorious in elections, but other countries seem wedded to the idea of consumption taxes to boost revenue – despite the political cost

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A shopping mall in Kuala Lumpur is decked out in Lunar New Year decorations. Photo: AFP
Bhavan Jaipragas
It may not make for colourful dinner conversations, but from Malaysia to India, Singapore and Saudi Arabia, the goods and services tax (GST) could well be Asia’s most important economic talking point this year, especially as policy moves to boost reliance on consumption levies come home to roost.
In Malaysia, where Prime Minister Najib Razak is expected to call elections within months, his opponents believe their anti-GST platform will be the single most important factor in swaying government-friendly rural voters fed up by surging costs of living.
Indian Prime Minister Narendra Modi’s roll-out of a goods and services tax was strongly criticised. Photo: AFP
Indian Prime Minister Narendra Modi’s roll-out of a goods and services tax was strongly criticised. Photo: AFP
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The stakes are not as high in India – nationwide polls are due in 2019 – but observers say all eyes will be on how Prime Minister Narendra Modi’s government overcomes the stinging criticism it has faced for the hasty roll-out of a much-hyped GST.

The move – India’s biggest tax reform since independence – was meant to unify the US$2 trillion economy by abolishing state and federal levies to create one of the world’s biggest common markets, but IT glitches and a convoluted structure have tamped down expectations that investors will reap immediate rewards.

Withdrawal symptoms: cash is still king in India, Modi not so much

Further west, oil producers Saudi Arabia and the United Arab Emirates this week became the first among Gulf countries to implement a 5 per cent value added tax (VAT), as the two kingdoms’ hereditary rulers look to end tax-free living for their subjects after years of low petroleum revenue.

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