By Danial Dzulkifly
KUALA LUMPUR, May 5 — Malaysia will stay the course on key economic reforms, especially its shift towards targeted subsidies and efforts to broaden the national tax base, despite economic pressure and uncertainty from sweeping tariffs by the United States.
In a special parliamentary session, Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz echoed Prime Minister Datuk Seri Anwar Ibrahim’s earlier remarks that Malaysia’s economic fundamentals remain sound, with ongoing reforms bearing fruit in the form of lower inflation and rising growth.
“On the back of these reforms, we must stay committed to fiscal consolidation to ensure our nation’s long-term resilience,” he said in his wind-up speech today.
As part of this effort, Tengku Zafrul confirmed that the rationalisation of RON95 subsidies, the activation of e-invoicing, and broader Sales and Services Tax will continue, albeit in a gradual and carefully managed way.
He said the introduction of e-invoicing would significantly lower leakages from tax non-compliance, improving revenue collection without increasing duty rates.
“If the government were to deviate from good fiscal governance, it could undermine investor confidence and affect the nation’s macroeconomic stability.”
Tengku Zafrul said the government will continue to closely monitor the global economic landscape and stands ready to make policy adjustments should the need arise.
Earlier, during the special sitting to discuss US tariffs, several opposition MPs urged the government to pause subsidy rationalisation efforts, including the planned removal of fuel subsidies.
They also called on Putrajaya to reconsider the push to expand the tax base, citing concerns over the added burden on local businesses and ordinary Malaysians amid the current US tariff kerfuffle.
In his opening remarks at today’s sitting, Anwar announced several measures to cushion local businesses from tariff impacts, including a RM1.5 billion fund.
He also explained that the 24 per cent tariff imposed by the US on Malaysia is based on flawed economic calculations, and assured that negotiations will continue with the US to ensure a win-win situation.
Since the formation of the Unity Government in November 2022, Anwar’s administration has enacted reforms aimed at transitioning Malaysia to a high-income economy and promoting sustainable, inclusive growth.
These reforms include the Madani Economy initiative, which focuses on economic integration, attracting foreign investment, and promoting digital and green growth.
Others include the Economic Transformation Programme, the Shared Prosperity Vision 2030, and the shift towards targeted subsidies.
