Spending On Productive Activities Generate More Growth, Bring In More Revenue -- Steven Sim

Deputy Finance Minister II Steven Sim Chee Keong

KUALA LUMPUR, May 18 (Bernama) -- Spending on productive activities will generate more growth for the country as it will bring in more revenue, thus in turn the government will be able to service its debts, Deputy Finance Minister II Steven Sim Chee Keong said.

However, the concern about high debt which stood at RM1.4 trillion as of last year including liabilities, is both important and valid, he said. People must also be asking two other questions, “what are we taking up debt for and whether we are able to service our debt,” he added.

“Knowing how big our debt is without asking the other two questions only tells half the story.

“There is definitely a big difference between the government taking on debts to fund development, build schools, improve healthcare, and enhance the investment environment compared to the government taking on debts to foot the bill for corruption, leakages and wastages,” he said in his speech during the National Economic Forum 2023 here today.

He said the government is committed to reduce the debt and liability exposure.

Despite tabling the biggest budget nominally at RM388.1 billion this year, Sim said government spending is more strategic and disciplined, of which, case in point, the budget deficit will be reduced from 5.6 to 5.0 per cent.

He said the large development expenditure was with emphasis not on white elephant mega projects but on strategic infrastructure - education, healthcare, transportation and commerce.

“In the first quarter of this year, total federal government debt-to-gross domestic product (GDP) as at end-March 2023 stood at 59.3 per cent, while the statutory debt levels recorded 56.9 per cent of GDP, far below the statutory limit of 65 per cent. (2022: 57.6 per cent of GDP).

“It is our aim to reduce our budget deficit to 3.6 per cent within the next two years, and with the government's plan to reduce borrowings by at least 10 per cent each year compared to the previous year, we hope to arrive at the pre-crisis statutory debt-to-GDP level of below 55 per cent in seven years' time by 2030,” he said.

Meanwhile, he said the government will continue to review and improve tax administration, with the automatically-assigned Tax Identification Number (TIN) introduced in 2022 to ensure broader coverage and prevent leakages in collection.

He said the Inland Revenue Board (LHDN) will also be piloting the e-invoicing system to ensure more efficient tax management and enhance tax compliance.

“I know taxmen and taxwomen are not exactly everyone's favourite people. But let me assure you today that while we will be strict against tax avoidance and tax evasion, it doesn't matter if you are a big shot or an ordinary person - there will be no double standards. We will catch up on you - LHDN has adopted a Madani approach to taxpayers.

“The (LHDN) CEO (chief executive officer) calls it AES - Awareness, Education and Service. In other words, we want to ensure compliance not by brute force but by guiding and assisting taxpayers to fulfil their national duty,” he said.