The Organisation for Economic Co-operation and Development has recommended that Malaysia reintroduce the Goods and Services Tax and gradually remove fuel subsidies to improve its fiscal position, Malay Mail reports.
The OECD assessment, published on Tuesday, argues that these measures would help strengthen Malaysia’s public finances. The recommendation comes as part of a broader review of the country’s economic policies.
According to Malay Mail, the OECD also urged Malaysia to expand access to public universities and strengthen merit-based admissions. In a separate report covered by The Edge Malaysia, the organisation highlighted the need for reforms in higher education.
The Star reports that the OECD said Malaysia requires fresh reform momentum to achieve fiscal sustainability and boost productivity. The organisation also noted that the country’s reliance on government-linked companies is weighing on productivity, according to KLSE Screener.
Malaysia’s economy minister has stated that the government is prioritising wage growth before widening the tax base, Newswav reports. This suggests a cautious approach to tax reform, potentially delaying any reintroduction of the GST.
The OECD’s recommendations are likely to fuel debate in Malaysia, where the GST was abolished in 2018 after public backlash. The government’s response to these proposals will be closely watched.
