, Singapore

Positive business environment to double Malaysia's fiscal revenue

Revenue growth is expected to rise by 6.4% from last year’s 3%.

Malaysia’s fiscal consolidation efforts are proving effective as revenue growth is expected to double in 2018 by 6.4% in 2018 compared to last year’s lacklustre 3%, according to BMI Research.

Plans to expand the collection of Goods and Services Tax (GST) should boost revenue collection and drive higher corporate profits and income tax revenues in 2018, BMI added.

Business activity is also on a similar upswing as the Nikkei Malaysia PMI score of 52 in November indicated accelerated growth in both output and new orders. Monthly employment levels which rose to 2.1% in September from 1.4% the previous month, also pointed to better business confidence.

This bodes well for overall fiscal revenue as corporate income accounts for more than a quarter (28%) of Malaysia’s overall earnings.

Similarly, individual income tax revenue, which represents 15% of total fiscal revenues, is projected to increase thanks to improving growth outlook that will most likely manifest in higher wages.

BMI similarly maintains that Malaysia will be able to achieve its fiscal deficit target of 2.8% of GDP in 2018 from last year’s 3%.

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