Prime Minister Mahathir Mohamad has made it a priority to cut Malaysia’s debts and liabilities — estimated at 1 trillion ringgit or 80 per cent of GDP — after taking into account Government guarantees and other payments. The newly formed Government has blamed economic mismanagement and corruption under former scandal-tainted leader Najib Razak and the long-ruling coalition Barisan Nasional that was ousted by a surprise defeat in the recent May 9 national election.
The country’s mega projects by the previous ruling party , along with the 1Malaysia Development Bhd (1MDB) scandal, have been cited as one of the main contributors to its staggering RM1 trillion debt. Prime Minister Dr Mahathir said the overall debt figure was higher than what was disclosed under the previous administration because the state had given credit guarantees to companies such as 1MDB. Malaysians have since rallied to set up a fundraising campaign towards reducing the nation’s debt. In response to the initiative, Dr Mahathir said the government, via the Ministry of Finance (MoF), will establish a special trust fund called Malaysia Hope Fund (Tabung Harapan Malaysia) to collect donations to help the new Government repay its hefty national debt. There are many Malaysians who were willing to donate to the Government when they found out how bad the country financial situation is currently.
“Due to the fiscal position of the country, many of the rakyat have come out to declare their willingness to donate to the government. We welcome their patriotic spirit and we thank them for their determination. This fund will ensure that the donations will reach the responsible authorities,” Dr Mahathir said. In a separate statement by the Ministry of Finance, Minister Lim Guan Eng said that the Malaysia Hope Fund would provide a systematic and transparent platform to manage all public donations. The ministry provided the name of a local bank and an account number for contributions which it said must be made in cash denominated in the local currency. All contributions shall be deposited into Malayan Banking Bhd, account number 5660 1062 6452. “Due to the recent economic development and the growing concern among the rakyat [people] on the country’s current debt position, there are signs of awareness from the rakyat to lend their support to the Government,” the finance ministry said in a statement.
The move is unusual for a government but it comes as a response to a crowdfunding campaign started recently by a Malaysian to help settle the staggering Government debt. The election victory by Dr Mahathir’s alliance inspired patriotic sentiment among many citizens who have expressed pride on social media about being part of a new Malaysia that is free from graft and race politics. Besides that, Dr Mahathir also announced the reintroduction of the Sales and Services Tax (SST) effective September 2018. The SST will replace the zero-rated Goods and Services Tax that will take place beginning tomorrow, to make up for the shortfall in government revenue.
The PM said retail fuel prices for diesel and RON95 will remain at their respective current rates of RM2.18 and RM2.20. The price of RON97 will be floated and subjected to global oil price fluctuation.