KUALA LUMPUR - A better financial management in 2023 will be able to restore the business and investment sentiments in Malaysia and its impact will indirectly be felt by the people in about one year, said Economy Minister Mohd Rafizi Ramli.
He said an improved financial management would also be able to strengthen the nation's fiscal space little by little.
"When it (financial management) is carried out more prudently, Insya-Allah, in 2024 we will have more room to spend,” he said in an interview on Ayuh Malaysia Show themed ‘Malaysian Economy: Between Perception and Reality’ on Friday.
Mohd Rafizi said Malaysia's economic standing is seen as more resilient compared with its fiscal position.
"However, the people's wellbeing and government's capability is not placed on the economic growth solely if looked at from different angles," he said.
Apart from that, the minister said that what determined the cash flow position is the amount of tax collection and types of income that flows into the government's coffers.
"The economy grows but not all translate into revenue for the government as the biggest component is income tax whether from individuals or companies. If the economy expands but individual income does not rise and companies are not profitable, then there's no increase in tax (collection) for the government,” he said.
According to Mohd Rafizi, compared with other Asean countries, Malaysia is placed at No. 3 from the bottom in terms of percentage of income tax to the government compared with the size of the economy at about 11.4 per cent, against Asean average of 15 per cent, while for advanced countries the percentage is higher at around 25 to 30 per cent.
"This is one of structural problems and it is the responsibility of the government to find ways to address it in the medium- and long-term and ensure that the growth in salary can match the increase in the prices of goods," he said.
Nevertheless, he said if the country's finances could be managed well by reducing leakages, corruption and others, then the country will not be in a desperate situation.
"This means, with revenue that we have of more or less RM290 billion each year, if this is managed properly and expenditure is managed well by prioritising spending, we can sustain."
Prime Minister Datuk Seri Anwar Ibrahim who is also Finance Minister will table the revised Budget 2023 in the Dewan Rakyat on Feb 24. - BERNAMA