Well it is not a secret anymore that with the Malaysian economy tanking and we are running close to the self-imposed limit of 55% ( we are currently at 53%), Malaysia will have to increase revenue and at the same time reduce expenditure. However, reducing expenditure might be too big a task as most mega projects have commenced and postponing or canceling them will have adverse impact on the economy.
For me I believe these are what will happen:
a) Impose of GST to replace the SST. Will likely be at 3-5% and this will cause a drop in the average Malaysians disposable income. However, I would believe that the Government will reduce the personal income tax to ensure that Malaysians have money to spend in the first place. A reduction of income tax by 2-3% points should be suffice.
b) Extension of the tax exemption for hybrid cars lower than 2000cc. That should spur our car industry and ensure that the major car manufacturers choose Malaysia as the hub for EEV manufacturing. We will never be able to fight Thailand in terms of producing petrol and diesel vehicles as they are miles ahead of us, but we can still offer some challenge in terms of EEV. DON'T let this slip out of our grasp Malaysia. We NEED this!
c) Remove DIBS, impose higher stamp duty for third property onwards, increasing the RPGT higher and imposing a lower MOF for third properties and onwards. That should help stabilize the property market.
And finally lets see what the Government will do to stop our free falling currency. Normal doctrine will show us that the Government will increase the interest rates to stop the free fall. And that is what a normal thinking person would do as well.
I would take the opposite view. Look at the reports coming out, our export is falling and our foreign currency cash pile is dwindling. And our growth comes from local consumption. To encourage a greater export and to ensure sustainable internal consumption, what is the best way to do it?
Decrease the interest rate!
Let our currency go to RM3.80 to the dollar. Make sure that our export grows and when interest rates are so low, no1 keeps money in the banks anymore. they will spend on either consumables ( and thus increase our GST collections) or they will hedge against inflation; buying up properties maybe? ( increase our stamp duty collection)
So if i exchange RM20,000 to the dollar now ( RM3.20 to the dollar) that would be approximately USD 6250. Now assume that the Ringgit does drop to RM3.80, that would be RM 23,750, a profit of RM3,750. 15% returns. ( ok, i assume that you are smart enough to find banks or changers that charge lower service fees)
But assume that the Government does increase the interest rates, what is the risk? Rm3.00 to the dollar? that would be RM18,750, a deficit of RM1,250.
So make that call, if you think our currency will drop further, make that exchange.
For me I believe these are what will happen:
a) Impose of GST to replace the SST. Will likely be at 3-5% and this will cause a drop in the average Malaysians disposable income. However, I would believe that the Government will reduce the personal income tax to ensure that Malaysians have money to spend in the first place. A reduction of income tax by 2-3% points should be suffice.
b) Extension of the tax exemption for hybrid cars lower than 2000cc. That should spur our car industry and ensure that the major car manufacturers choose Malaysia as the hub for EEV manufacturing. We will never be able to fight Thailand in terms of producing petrol and diesel vehicles as they are miles ahead of us, but we can still offer some challenge in terms of EEV. DON'T let this slip out of our grasp Malaysia. We NEED this!
c) Remove DIBS, impose higher stamp duty for third property onwards, increasing the RPGT higher and imposing a lower MOF for third properties and onwards. That should help stabilize the property market.
And finally lets see what the Government will do to stop our free falling currency. Normal doctrine will show us that the Government will increase the interest rates to stop the free fall. And that is what a normal thinking person would do as well.
I would take the opposite view. Look at the reports coming out, our export is falling and our foreign currency cash pile is dwindling. And our growth comes from local consumption. To encourage a greater export and to ensure sustainable internal consumption, what is the best way to do it?
Decrease the interest rate!
Let our currency go to RM3.80 to the dollar. Make sure that our export grows and when interest rates are so low, no1 keeps money in the banks anymore. they will spend on either consumables ( and thus increase our GST collections) or they will hedge against inflation; buying up properties maybe? ( increase our stamp duty collection)
So if i exchange RM20,000 to the dollar now ( RM3.20 to the dollar) that would be approximately USD 6250. Now assume that the Ringgit does drop to RM3.80, that would be RM 23,750, a profit of RM3,750. 15% returns. ( ok, i assume that you are smart enough to find banks or changers that charge lower service fees)
But assume that the Government does increase the interest rates, what is the risk? Rm3.00 to the dollar? that would be RM18,750, a deficit of RM1,250.
So make that call, if you think our currency will drop further, make that exchange.
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