GST will not result in (long term) inflation in Malaysia, says Bank Negara assistant governor.

One of the main concerns of the GST is that it will cause an increase in inflation rates. 

According to Bank Negara Malaysia (BNM) assistant governor, Dr Sukhdave Singh,  the introduction of GST in Malaysia could cause be a temporary spike in prices (based on experiences of other countries), and a moderate increase in the rate of inflation.  

"If it (GST) is to be introduced in a moderate level  (estimated at 4%), we will see a temporary moderate increase in inflation rate. But, if there is no secondary impact, then the inflation rate will come down very quickly because there is nothing to support it,"  he said

For now, BNM do not think it will create inflation. He said if there are opportunistic attempts to increase prices, thus inducing an inflationary cycle, BNM will use monetary policy to check it (inflation).

So, what is the main purpose of introducing GST in Malaysia?  Reading between the lines from these 2 articles,  GST will   "certainly be steadying the development in the economy after the introduction".

Do your part for nation building.  That's what taxes are for anyway.

See full article in
The Star  dated March 26, 2010
Bernama dated March 25, 2010

Government to provide public education on GST

How is the Malaysian Government going to educate the public on the Malaysian GST issue?

Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah said,  "the Government would embark on a programme, with help from the Information Department, to educate the public and disseminate accurate information."

He also said that  "The Government will only implement the proposed Goods and Services Tax (GST) in Malaysia if the people accept it"

In addition, he  said the Government wanted the people to view the GST favourably, rather than look at it as something imposed on them.  The people  are (will be?) given the chance to give input so that when implemented, GST will be accepted by the people and the government.   In fact, I think the people should feel proud because they are being consulted. (how does one interpret this statement purportedly from the Minister?)

The public education will  allay the many misconceptions about GST, and to dispel the perception that the delay in GST implementation in Malaysia to a later date,  is not a lack of political will.

Background: Note :
The Malaysian government decided to postpone tabling of the Goods and Services Tax (GST) Bill for second reading in parliament scheduled on March 17, 2010,  after having tabled it for first reading in December 2009.

We hope to see more active discussion, with facts and figures, not only official statements from the Goverment.

Read the actual interviews with the Minister here and here

Malaysian GST

Malaysia is on the verge of implementing GST come 2011. However, the Government did not proceed to table the 2nd reading of the GST Act in Parliment in March 2010.
Why did the Malaysian government decide not to proceed with the tabling of GST Act in parliment?

Even at this late stage, a majority of Malaysians do not know a thing or two about GST. So the Malaysian Government is going to engage the people to get the general consensus before they implement GST.

In my nature of business as a supplier of accounting software, I meet small to medium sized business owners everyday, and many are still ignorant of GST, its implications on their business, and how to go about preparing for the eventual coming of GST.

So this blog will be a good resource for my customers, and the general public.