Is Luxury Goods Tax a Good Way to Raise Revenue?

The Finance Ministry is finalising several policies related to the high-value goods tax, including the type of items that would be levied.  An economist described the tax on luxury goods, which was expected to be implemented on May 1, an effective way to expand the government’s tax base. It will not burden the B40 lower-income group.

The luxury tax was expected to apply on items such as jewellery and watches that exceed a certain price threshold. It was expected to earn the government RM700 million annually.

The proposed rate of between 5% and 10% was viewed as reasonable, when compared to other countries like China and Indonesia. China’s luxury tax is reported to be between 30% and 40% on imported high-end goods, with the Chinese government considering lowering it by 10%. In Indonesia, the tax ranges from 10% to 95%.

Source: https://www.linkedin.com

Tax revenue-to-GDP ratio for Malaysia has been declining steadily over the decades. In 2021, the Organization for Economic Cooperation and Development (OECD) reported that Malaysia’s tax revenue-to-GDP ratio stood at just 11.8%, lower than Thailand (16.4%), the Philippines (18.1%) and Vietnam (18.2%).

Expanding the tax base is important. Hence, the view by some, to re-introduce the GST. That’s silly! Net receipts from GST will only make sense if it is 6% or above. That will drive inflation up. Then again, we are not a developed nation nor our Gini-coefficient below 0.35 (it is currently hovering around 0.4). So, if not for GST what else? We could do a Tobin tax, broaden the excess profit tax or consider an inheritance or wealth tax!

Reference:

Luxury goods tax a good way to raise govt revenue, says economist, Ameer Fakhri, FMT, 

23 March 2024

Why Are Many Older Adults in Malaysia Unhappy?

 The annual celebration of the International Day of Happiness fell on 20 March. This day was defined by a resolution in the UN General Assembly in 2012. A day decreed to be observed annually on 20 March because happiness and wellbeing are universal goals and aspirations around the world.  

This year’s theme “Reconnecting for Happiness: Building Resilient Communities” aims at happiness for the young, the old and everyone in between. As of 2024, Malaysia was ranked 58th out of 143 countries in life evaluation 2021-2023. The rankings for other Asean member countries were Singapore (30th), the Philippines (53rd), Vietnam (54th), Thailand (57th), Indonesia (80th), Laos (104th), Myanmar (118th) and Cambodia (119th).

Source: https://www.un.org

Among the criteria used include GDP per capita, social support, healthy life expectancy, freedom, generosity and corruption.

 Malaysia stood at 64th among those aged below 30 (Thailand was 45th) and 71st among those aged above 60 (Thailand 41st, Philippines 43rd and Singapore 26th).

So Malaysian citizens aged 60 and above were the least happy in the country, while those below 30 were the happiest. The “World Happiness Report 2024” quotes from the “Seven Ages of Man” in Shakespeare’s As You Like It: “the later stages of life are portrayed as deeply depressing.” This quote may well describe the state of mind of many older Malaysian adults.

Some factors that may contribute to older adults being the least happy group in the country include:

• Financial insecurity, which can result from ineffective financial management after retirement, insufficient savings, low retirement benefits and lack of awareness, thus limiting access to various pension schemes which are only available in more recent years.

• Limited access to healthcare facilities, long waiting times, and high out-of-pocket expenses.

• Social isolation and loneliness are common among older adults in Malaysia, especially those who live alone or have limited social support networks. 

• Age discrimination in employment and societal attitudes can limit opportunities for older adults to remain active and engaged in the workforce and community life. 

• The lack of affordable and suitable housing options that are age-friendly and accessible is a challenge for many older adults in Malaysia. 

• Older adults in Malaysia are at risk of various forms of mistreatment, including financial exploitation, neglect, and physical or emotional abuse.

• Transport and mobility are a problem for many older adults due to limited access to reliable and affordable transport options. 

• The digital divide limits many older individuals’ access to digital technologies and the internet. This restricts their ability to stay connected, access information and take advantage of online services, such as telemedicine and e-commerce

By identifying these factors, we may improve the happiness of older adults in Malaysia. This will assist local authorities, planners and welfare organisations in formulating targeted strategies to create a more inclusive society by studying the inequality of happiness.

Reference:

Why are so many older adults in Malaysia unhappy? Goh Hong Ching, ALIRAN, 30 March 2024

The Malaysian Economy to Grow 4.0% - 5.0% in 2024

The info-graphics below are from BNM’s Annual Report dated 20 March 2024, a snapshot of possible growth prospects in 2024.

It seems 2024 is a better year! But I wonder, if they (BNM) have simulated a worse-case scenario – unwarranted political instability, slow pick-up on exports, subdued domestic consumption due to lower disposable income, deferment by FDIs and DDIs due to less than attractive investment climate and lower government spending owing to fiscal constraints? I am not a “prophet of doom” but a good presentation will carry a worse-case scenario and an optimistic case, and you may still believe a base case that lies somewhere in between. All I am going to say is “hope for the best”!

Reference:

BNM Annual Report 2023

Ripple Effect of Court Decision on Healthcare Industry

 The operational and ethical frameworks governing the medical practice are set to experience a ripple effect following a recent landmark ruling on healthcare accountability. The Association of Private Hospitals Malaysia president said the Federal Court has decided to hold Columbia Asia Sdn Bhd and an anaesthetist jointly responsible for the tragic medical outcome of Siow Ching Yee. The decision compels the hospital and its staff to compensate Siow nearly RM4 million for negligence that led to severe brain damage.

This ruling will have ripple effects across the Malaysian medical community, potentially influencing practitioners to adopt a more cautious approach to clinical procedures. The court judgment has economic ramifications, particularly in increased insurance premiums for medical facilities. That may challenge the affordability and accessibility of healthcare. Escalated insurance premiums for medical facilities further exacerbates concerns.

Source: https://en.wikipedia.org

Nevertheless, Malaysia's private healthcare industry has long been lauded for its high-quality services at competitive prices, making it a preferred destination for medical tourists in the region. The value-driven healthcare has only strengthened in the post-pandemic era.

Recognising the gravity of this ruling, other jurisdictions in the region could take proactive measures to ensure fair assignment of liabilities and reasonable compensations. A nuanced dialogue among all healthcare stakeholders as a follow-up to the court ruling could act as a reflective examination.

The dialogue could include regulators and legal experts, aimed at reconciling the drive for medical advancement with importance of patient welfare while balancing the cost and access to care. The likely people to benefit from all of this, is the insurance companies and the legal profession. So long as we don’t become the likes of the USA, we may hold costs, patient care in intricate balance, we then could advance affordable medical care.

Reference:

Healthcare community will experience ripple effect following court decision on hospital accountability, Luqman Hakim, New Straits Times,18 March 2024

MMC: What Is Going On?

The corporatized medical regulator, MMC, is making decisions which appear to be contradictory to the path taken by the health ministry on recognition of specialist programmes.

The management of Malaysia’s healthcare system is showing some serious cracks. Some are saying it is now under the high dependency unit. Quick action has to be taken before it lands itself in the intensive care unit.

Pressing matters are not being given the attention that is due. More than 6,000 contract doctors have left government service in the past six years, mostly due to long waits for permanent employment. Some threw in the towel after claiming they have been overworked and underpaid. The number is set to grow.

Source: https://mmc.gov.my

The most telling figure that ought to have jolted the authorities is that about 1,500 heart and lung disease patients in government hospitals are forced to wait up to a year for life-saving surgeries. All because of a serious lack of qualified surgeons. The Malaysian Association for Thoracic and Cardiovascular Surgery which gave this figure has estimated that two patients die each week. There are only 14 cardiothoracic surgeons left in public hospitals, working against time to save the lives of these patients.

Surgery in private hospitals can cost at least RM80,000. In government hospitals, patients pay only about RM500.

Despite this utmost urgency, the medical council, MMC, has taken a questionable stand by refusing to recognise cardiothoracic surgeons who were trained at the Royal College of Surgeons of Edinburgh under the health ministry’s parallel pathway programme.

The Edinburgh programme is recognised by the rest of the world. Without this accreditation, the specialists cannot be placed in the national specialist register, and cannot practice, either in the public or private sector. Right now, there are four cardiothoracic surgeons who have completed the course and 28 more in various stages of completion.

What many find hard to fathom is that the MMC chief and the director-general of health are one and the same person – Dr Radzi Abu Hassan. And yet a recent ministry circular made people wonder if he knew what he was doing. The ministry invited those with specialist training in the fields of cardiothoracic surgery, family medicine and plastic surgery from Edinburgh and two other royal colleges to apply for the minimum six-month gazettement programme. This is a path for those in the parallel pathway to practise as specialists.

How can this happen when the MMC is refusing to recognise the very qualification for registration as specialists? 

Recently, Radzi announced that a special task force is to be set up to re-evaluate the recognition issue. Based on the names of the members in the seven-man special committee, there is no cardiothoracic surgeon among them. The fraternity holds this to be indeed very odd as a major issue involves the recognition of these specialists.

If the MMC cares to look around, there are scores of experienced cardiothoracic surgeons who have retired or are still practising in Malaysia with qualifications from the Edinburgh college.

The MMC is a body entrusted with powers to ensure medical professionals give their best to their patients and the nation. It also introduced the Code of Professional Conduct, providing the yardstick for the proper conduct and behaviour of doctors in their clinical practices. But is the MMC practising what it preaches?

Reference:

Hs the MMC gone rogue in the recognition of specialists? K. Parkaran, FMT, 1 April 2024

CEOs Will Balance Cost and Growth in 2024!

 The info-graphics below is extracted from The Star, 16 March 2024.

Chief executive officers (CEOs) will have to make some tough decisions in 2024 in managing costs and growing their businesses. Growth is an important factor and they remain cautious about the uncertain outlook for recession, inflation and rising interest rates.

About 65% of CEOs globally believe their companies are prepared for any additional global shocks in 2024 and 70% have enough visibility to make long-term capital-investment decisions. They are prioritising overall cost management, with a special interest in supply chain and manufacturing costs, according to a survey report from Boston Consulting Group (BCG) involving over 600 global CEOs.

Following cost management, growth is the next priority for executives. Globally, growth via geographic expansion is a priority, especially for consumer, infrastructure and logistics executives.

More than 50% of them believe accessing talent will remain a challenge this year amid digital disruption, cyber risks, higher cost of energy, access to capital/financing and meeting climate commitments.

Artificial intelligence has great potential, growing demands for sustainability offer business opportunities and early investments can boost revenue, reduce costs and enhance brand reputation, BCG said. Exploring new markets and product/service segments can help unlock new sources of top line growth amid shifting global economic and geopolitical dynamics, the report said.

The key for companies, as I have said before, is to remain lean and nimble. Those who have got into trouble had to carry-out painful redundancies and other cost cutting measures. Too much optimism and wanton hiring generally leads to difficult choices when things are no longer good. Being cautious in people hiring helps to keep stability for companies and lives.

Reference:

CEO to balance cost and growth in 2024, B.K. Sidhu, The Star, 16 March 2024

Selamat Hari Raya