Malaysia's higher revenue shows that the economy is recovering

By ZAIDI ISHAM ISMAIL
editor@dagangnews.com

KUALA LUMPUR Dec 15 – COVID-19 has wreaked havoc on almost all economies in the world, Malaysia included.

Most world economies tumbled and some regressed into economic depressions in 2021 unable to swat away the long tentacles of the pandemic.

At a time when most nations are still grappling with the aftershocks of the virus, Malaysia on the other hand bucked the trend to see the economy rebounding.

Prime Minister, Datuk Seri Ismail Sabri Yaakob announced on Monday that as at November 2021, the government collected a revenue of RM210.4 billion, which is an 8.9 percent increase.

The prime minister said at this rate, the country is expected to trim its fiscal deficit of 6.5 percent to 6 percent of gross domestic product

Bank Islam chief economist Dr Mohd Afzanizam Abdul Rashid said the rise in revenue collection suggests that the government is on track to achieve much lower deficits going forward. 

"This should give assurances especially to the credit rating agencies that expansionary fiscal policies will gradually reverse as the economy starts to show some signs of recovery," Afzanizam told DagangNews.com.

He added this would also translate into lower risks of a sovereign rating downgrade. 

"Lower fiscal deficits going forward would mean that the government would have more financial space to deal with possible economic calamities, said Afzanizam.

Meanwhile, Universiti Putra Malaysia Business School business development manager Associate Professor Dr Ahmed Razman Abd Latiff said an increase of 8.9 percent of revenue in November is commendable.

This is due to the fact that the country's GDP (gross domestic product) is not growing as high as the economists are hoping.

"For example, the country recorded a -4.5 percent in the third quarter and a possible overall 2-3 percent growth for 202."

Therefore, an 8 percent revenue increase in November is considered a welcoming good sign," Razman told DagangNews.com.

An economist at a local university meanwhile said the fact that the government revenue is increasing shows that the workforce in the country is still solid.

"We all know that part of government revenue comes from income tax and despite many people are jobless, it shows that another portion of the country's workers are still working able to pay their taxes."

Razman meanwhile said the breakdown of the government revenue increases in November is not known whether it comes from direct tax income, indirect tax income or other income.

"So, it is difficult to link the increase in revenue with the number of unemployed or tax compliance rate. 

The most possible explanation is that this increase in revenue could be related to other income such as import duty fee as value of export and import has been in increasing trend for the past few months," said Razman. – DagangNews.com