Malaysia will devise new taxes soon to shore up a state budget that’s been constrained by debt and changes to the consumption levy, Prime Minister Mahathir Mohamad said.
The government may also have to sell assets to raise money to pay “huge debt,” he said at a forum in Kuala Lumpur, adding that he believed foreign investment will still come and contribute to the nation’s economic growth. He didn’t specify what new taxes he was considering.
The Southeast Asian nation is grappling with debt and liabilities exceeding MYR 1 trillion ($241 billion), worsened by state guarantees on notes issued by troubled fund 1MDB, and the replacement of a sweeping consumers tax with a more selective levy.
Malaysia is turning to additional bond issuance and sales of assets, including stakes in “non-critical, non-strategic companies” to raise funds to meet its fiscal deficit target of 2.8 per cent of gross domestic product this year, Finance Minister Lim Guan Eng said in August. One of those companies could be state oil firm Petroliam Nasional Bhd., though Mahathir hasn’t come to a decision on whether to offer it through an initial public offering.