Malaysia’s opposition leader calls govt GDP forecast for 2021 ‘unrealistic’

KUALA LUMPUR, Nov 9, 2020, Malay Mail. Opposition Leader Datuk Seri Anwar Ibrahim today questioned the government’s projected growth of the country’s gross domestic product (GDP), which is expected to expand between 8.6 to 9.6 per cent in 2021, claiming it is “unrealistic,” Malay Mail reported.

In his debate on Budget 2021 in the Dewan Rakyat today, Anwar quoted several economic projections from other financial institutions, namely the Asian Development Bank, International Monetary Fund (IMF), Bank Negara and the World Bank, that he said offered a more pragmatic outlook for the nation’s GDP growth for the coming year.

The Asian Development Bank had projected that Malaysia’s GDP growth will be at 6.5 per cent, IMF projected it to be at 7.8 per cent and the World Bank projected the nation’s economic growth to be between 4.4 per cent and 6.3 per cent, with an average of 5.35 per cent. Bank Negara had projected it to be between 5.5 per cent and 8 per cent.

“From where did the minister of finance get such projections that is so great and high or is this to fill the political appetite to convince that we can reach such a convincing growth?” ask Anwar

“I know projections are not usually accurate, that I understand and there often mistakes, but the projections must be realistic. It must say the truth, not to confuse.”

Kulim-Bandar Baharu MP Saifuddin Nasution Ismail then interrupted Anwar’s debate by asking the government to clarify which sector of the economy is contributing to the aforementioned projection.

“What is important is that we demand an explanation from the government as to which sector is stated to be strong in contributing to this economic growth. This is important so that our Budget is not seen to be based on creative, imaginary numbers,” he said.

Anwar then explained further that while exports have seen double-digit improvements, corporate tax has decreased from RM63.8 billion in 2019 to a projected RM59.4 billion in 2020.

“So we know that with the weakness facing the industry, the reduction in income, the closure of companies and job losses, impossible that the reduction would be RM4 billion, so the projection is not realistic,” he said.

On Friday, the Finance Ministry (MoF) said in its Fiscal Outlook and Federal Government Revenue Estimates 2021 report projected that the federal government revenue to decrease by 14 per cent to RM227.3 billion in 2020 from RM264.4 billion last year as a result of lower tax collection.

The report also shared that the direct tax, which amounts to 50.6 per cent of the total revenue, is expected to decrease by 14.6 per cent to RM115.1 billion (2019: RM134.7 billion).

Companies’ income tax, the major contributor to total revenue, is also estimated to be lower at RM59.4 billion (2019: RM63.7 billion), which is about a 21 per cent shortfall from the original estimate of RM75.5 billion.