Malaysia: Possible increase in deficit

     The Ministry of Finance of Malaysia wants to reduce GST to zero percent and re-introduce turnover tax to compensate for any revenue shortages. Rising oil prices - positive for net energy exporters, such as Malaysia - will also support revenues, officials said.

     But some analysts are not convinced.
     Combined with the fuel surcharges - promises made by the current administration - as well as high country foreign debt and low reserves, sales tax is not very comforting.
     We could look at Malaysia's fiscal deficit next year go as high as up to 4.3 percent of GDP, what would be a big increase from 2017  level at 3.0 percent.
     The degree of fiscal deterioration after the election is the main risk factor for foreign investment. And although it is still too early to draw any conclusions, it is in the hands of the government to take appropriate action for investors and rating agencies. 
    If GST was abolished "without adjustment measures", it would be negative for the country's credit, according to Moody's Investor Services.