(Apr 23): The goods and services tax (GST), which is the key part of the biggest series of tax reforms in the history of the country, went through rigorous and detailed study before it was implemented, Datuk Seri Najib Razak said today.

“Most recently, we oversaw the introduction of the goods and services tax. The aim of this is to make the taxation system more effective, transparent and business friendly. GST in Malaysia has gone through rigorous and detailed study,” the prime minister said in his keynote address at Invest Malaysia 2015.

He said with the implementation of GST on April 1, the Finance Ministry expected the GDP (gross domestic product) to increase by 0.3% and exports by 0.5%.

“Our products will be extra competitive in the international market as no GST will be applied on exported goods and services, while Malaysian firms will benefit from a lower cost of doing business by recovering any input taxes,” said Najib.

Earlier, Najib said that Malaysia’s economic fundamentals were strong and the country was on track to achieving its goal of reaching high-income nation status by 2020.

He said that was why the reforms enacted under the Economic Transformation Programme were vital, including the establishing the Fiscal Policy Committee to reduce waste, prevent misuse of funds and optimise operating expenditure.

“We have taken measures to control inflation and we have seen the results,” he said.

Food inflation, for instance, he said, dropped from 3.9% a year ago to 2.8% last month.

“There have been major reforms in the energy sector. Subsidies have been removed, with prices of petrol and diesel now being fixed by a managed float system, allowing more public resources to be spent on development and infrastructure for all,” he said.

He later spoke about the role of government-linked companies and their contribution to the nation’s economic growth and development over the past 10 years, their profits and growth in income as well as the World Bank’s figures on Malaysia’s economic status and projection.

“Success in these areas is good for all Malaysians. But such figures can seem remote to the rakyat when on a day-to-day basis they may be more concerned with the cost of nasi for the family table, or roti canai from a stall,” he said.

The government announced in November that the retail prices of RON95 petrol and diesel would follow the managed float system starting December 1.

Domestic Trade, Cooperatives and Consumerism Minister Datuk Seri Hasan Malek was quoted by national news agency Bernama as saying that the government had conducted a study on the system to ensure that people enjoyed the drop in world crude oil prices.

Hasan said that the government would continue to keep abreast of the cost of petroleum products and currency exchange rates.

He said the price of RON95 and diesel would be reviewed monthly, whereby the average cost of petroleum products from the previous month would be used as reference in determining the price for the following month.

Meanwhile, the implementation of GST received flak from many quarters with some even declaring it “haram” (illegal).

Najib had however countered this by saying: “It's confirmed by the National Fatwa Council that said GST is halal.”

One of Putrajaya's recent efforts to educate the public on GST through a music video received severe criticism from Malaysians after it went viral.

The video, purportedly created by the Customs Department, hailed the virtues of implementing GST but was panned by critics as "sad", "cheesy" and "reminiscent of the 1970s".

In the meantime, to ease the transition period, the Domestic Trade, Cooperatives and Consumerism Ministry set up a round-the-clock operations room to monitor prices after the consumption tax kicked in. – The Malaysian Insider