From the previous section in which we have discussed on the introduction of GST with its

advantages to the country, it is undeniable that GST is a good taxation system as compared to the
SST. This is due to the fact that GST is applied on a wide range of goods and services including
electronic devices, furniture, spare parts, so on and so forth. More revenue is generated from this
taxation system as compared to SST system. However, GST is not suitable to be implemented in
Malaysia, at least for current Malaysia economic and financial situation as there are a few reasons
that we have found out to support our point of view.

First and foremost, poor management of the national income by the government has caused the
benefits brought by GST to be malfunctioned. We do agree that the revenue collected from the GST
system is actually quite high in amount as compared to SST system. Based on the 2015 Budget
Speech by YAB Dato’ Sri Mohd. Najib Tun Haji Abdul Razak, current Prime Minister, with the
implementation of the GST, total revenue collected is estimated as RM23.2 billion, which is far more
higher than the However, if this revenue is not managed and distributed well to take care the
welfare of the public especially for those middle and lower income groups of citizens, then this GST
will just be a normal tax which gives more burden to the middle and lower income groups.

Next, according to 2016 Budget Speech by our current Prime Minister too, it is pleased to be
announced that collection of revenue from GST is RM39 billion, which is more than what has been
expected in Malaysia budget 2015. Thus, it is supposed that this extra revenue collected which is
more than RM10 billion should have been wisely managed and distributed to stabilise Malaysia
economy and for financial purpose especially when facing the low global crude oil price problem.
However, a recent research from tradingeconomics.com has shown that Malaysia external debt
continues to rise despite the reduction if budget deficit.

A smaller fiscal deficit does not equate to reduced debt. Malaysia may borrow less money but it
existing debt still remain unchanged and it also incurs interest charges. This shows that government
is weak in managing the total national income which causes there are there are no net revenue
collection could be used to pay the existing debt. If this problem is not solved as soon as possible,
Malaysia debt will increase unstoppable in a snowball effect. Notable bond investors such as Pine
Bridge is probably disappointed with the government performance and it has reduced its Malaysian
debt holdings recently in the face of the weakening Ringgit and economy.

On the other hand, Corruption Perception Index (CPI) for each country sends a powerful message to
the citizens and especially government to show how corrupt is the public sectors are seen to be.
Table 1: Malaysia Corruption Perception Index (CPI) – Data source: Transparency International

2008 2009 2010 2011 2012 2013 2014 2015

5.28 4.5 4.4 4.3 49/100 50/100 52/100 50/100
*Before year 2012, the scale is in 10 marks format where 0 is most corrupted condition while 10 is
the cleanest and most peaceful condition.

*On year 2012 onwards, the scale is changed into 100 marks format so as to give a clearer picture
and more accurate description on a country’s corruption condition where 0 is most corrupted
condition while 100 is the cleanest and most peaceful condition.

Table 2: CPI of other country in year 2015

Japan Singapore Denmark New Switzerland Greece Indonesia

Zealand
75/100 85/100 91/100 88/100 86/100 46/100 36/100
Current rate of GST (%)
5 7 25 15 8 23 10
Table 2

Based on Table 1, it clearly shows that Malaysia CPI fluctuates in the middle range from year 2008 to
year 2015. Due to this, we can infer that there is no much improvement has been done by the
government to improve its own CPI. We could not notice on the efficiency work or activities have
been done by Malaysian Anti-corruption Commission.

Next, from Table 2, we have chosen certain countries’ CPI in which GST is also implemented in these
respective countries. From the data above, we are able to come out with two inferences. Firstly, for
those countries that have low score in CPI, even though their GST rate is high, it does not reflect on a
better economy. For instance, Greece has implemented GST rate of 23%. Certainly, they will have
high revenue of collection from GST. However, its economy had become worse and finally came to a
bankrupt condition. This incident actually could be explained in terms of CPI index. Greece is having
46/100 for their CPI, it shows that corruption is quite serious which causes the big amount of the
revenue collection from GST to be poorly used up. Economic condition is not well taken care and
welfare of the citizens especially those of middle and lower income group is not given priority to
obtain support.

Apart from that, for a country with good CPI score, GST is actually very suitable to be implemented
and it acts as a bonus to the economy and income of the nation. Singapore, Denmark, New Zealand
and Switzerland have high CPI score in which it shows that there is very less corruption cases in their
respective countries. These countries also implement GST in their countries. As we can see, Denmark
with a very high GST rate of 25% could still be one of the most developed-country. We can infer that
the national income of Denmark is distributed in such a way that every citizens’ welfare is being
taken good care of. As a conclusion from these 2 tables, for GST to come into a true usefulness, we
need to have basis of clean nation instead of a corrupted government.
Data source:
Malaysia external debt- http://www.tradingeconomics.com/malaysia/external-debt
CPI- http://www.transparency.org/cpi2015#results-table
GST rate- http://gst.customs.gov.my/en/gst/Pages/gst_ci.aspx malaysia GST government website
http://www.treasury.gov.my/pdf/gst/list_of_countries.pdf