Focus on reforms, not changing policies, Pakatan told

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KUALA LUMPUR — Pakatan Harapan should not look to change government policies just for the “sake of change” if it wins federal power, a group of retired senior civil servants warned.

G25 said the federal Opposition pact’s manifesto for the coming 14th general election to abolish the goods and services tax (GST), abolish tolls and return fuel subsidies was a “populist” approach that could hurt Malaysia’s future economy.

“Changing everything for the sake of change is not wise. PH should concentrate its reforms on institutional integrity and governance (across parliament, judiciary and the public service), education, health, social safety nets, labour and taxation policies for higher wages and disposable incomes,” the group said in a statement.

It urged caution on taxation and subsidies, pointing out that sudden changes could tip the fiscal balance and destabilise the country’s entire financial sector by adding unnecessary pressure on the ringgit.

G25 said there was a need to amend the GST implementation to improve its efficiency and lower the burden borne by the lowest 40 per cent group of wage earners.

But it disagreed with PH’s proposal to revert to the sales and services tax (SST).

“Malaysia and many countries have found SST to be less efficient, have a negative impact on government revenue and make the budget deficit more difficult to control, as the country has been running on a budget deficit for several years now.

“GST has improved the deficit situation and it serves as a useful buffer against the ups and downs of the economic cycle and should therefore be retained to keep the revenue system strong,” the group said.

G25 said PH’s proposal to take over the 31 toll highways, including PLUS by paying the companies compensation to abolish tolls is also risky as the billions of ringgit it would cost in compensation could be better channelled into improving health, education and social safety.

“Backtracking on tolls will affect investor confidence as it would send a signal that commercial agreements signed with the government on privatisation projects, for which the companies have issued long-term bonds and raised bank loans, can be reneged with changes in administration,” it said.

It said sustainable investment requires certainty in honouring contracts based on laws and regulations.

“We would like to remind that government actions which are tantamount to nationalisation will send jitters among the investing community,” it said.

The group also said that bringing back fuel subsidies is extremely risky.

“It took decades of policy discussions, studies and analysis to move towards a market-based fuel pricing to promote efficiency in business decisions and innovation in energy consumption,” it said.

G25 said the huge fiscal gains from the subsidy rationalisation exercises can be better channelled to expand infrastructure nationwide so those in rural areas can enjoy higher living standards.

It said reforms on both the economy and structural fronts focusing on parliamentary checks and balance is the way forward to secure good governance and economic stability.

“G25 hopes all political parties will show true leadership and courage in managing our race relations and religious tolerance to strengthen national unity,” it said.