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