10 
business
Felcra welcomes
suggestion on
setting up of
consortium
KAMPUNG GAJAH: Felcra
Berhad welcomes the sugges-
tion by Prime Minister Datuk
Seri Najib Abdul Razak for it to
cooperate with Felda and Risda
in setting up a consortium to
carry out various high-impact
downstream activities.
Its chairman, Datuk Tajuddin
Abdul Rahman, expressed confi-
dence that the move would open
more room for the agency to
carry out activities which could
generate income for settlers in
an effort to eliminate hardcore
poverty.
“At present, each of the
agencies spend more than RM1
billion a year to import fertilisers
through middlemen because we
don’t have the purchasing power,
but through this cooperation, we
can get the supply directly,” he
told reporters at the handing over
of a cheque for RM65.8 million,
to be disbursed for payments
of dividends to Felcra settlers in
Perak yesterday.
The cheque was handed
over to Perak Information, Rural
Development, Poverty Eradica-
tion and Plantation Commit-
tee Chairman Datuk Saarani
Mohamad.
Tajuddin said Felcra, Felda
and Risda would meet soon
to discuss the proposed
cooperation, adding that he
believed the cooperation
would further strengthen the
economy of the three agencies.
– Bernama
Timing is crucial for
the implementation of GST
by Anthony Dass
WHAT is Goods and Services Tax (GST)? It is
a tax charged on the supply of most goods and
services made in the home country and on the
importation of goods into the home country.
As consumers, they will pay GST on all
taxable goods and services, except zero-rated
and exempted goods and services.
For businesses, they will charge GST on
all taxable goods and services. GST acts as a
part of a larger tax restructuring exercise that
Fergie enables the authorities to shift their reliance
won’t from direct to indirect taxes, while spreading
across the population.
spend The value-added tax or VAT is like GST
pg 29 and has several features making it attractive.
VAT is viewed as a tax on consumption and
not on income. Thus, it encourages savings
and investments compared to consumption.
Also, VAT is a self-policing mechanism that
will discourage evasion of taxes.
For instance, the retail sales tax and income
tax are subject to greater tax evasion compared
to VAT or even GST.
Malaysia plans to introduce GST with the
objective to have a wider revenue base and
ease the prolonged budget deficit, averag-
ing at 4.1% of GDP between 1998 and 2008.
Expectations are for the budget deficit to swell
to between 7.6% and 8.0% this year, to address
the country’s economic recession that ema-
nated from the global financial crisis.
The government intends to trim its deficit
next year by reducing operating expenditure
that makes up about 75% of total expenditure.
Fiscal Budget % of GDP
5
0
-5
-10
-15
-20
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It is possible if global recovery is on a
firmer note, exhibiting a ‘V’-shape growth
trend. Is this achievable? Current economic
figures are mixed, suggesting that the risk of
an anaemic global recovery remains. That
means one cannot rule out the possibilities for
a ‘W or double-dip’ or an ‘L’-shape recovery.
Should global growth lean towards any of the
two possibilities, greater stimulus measures
and further monetary easing will come into
force. Malaysia is no exception. As such, the
risk for higher deficit could not be discarded
absolutely for Malaysia. Nonetheless, on the
positive note is the ‘will-power’ to reduce the
budget deficit.
Underpinned by uncertainties, it is impor-
tant to look at several pertinent issues before
implementing GST.
First, the authorities will need time to
change the current taxation system.
Second, the government will have to be in
a better fiscal position i.e. budget surplus in
order to create comfort and affordability when
foregoing collection of tax and non-tax.
Third, the government must have the politi-
RM1.3bil in investment
for Penang in H1
by Opalyn Mok
newsdesk@thesundaily.com
GEORGE TOWN: The total investment in Penang
for the first half of this year is only RM1.3 billion,
which is about 13% of last year’s total investment
of RM10.2 billion.
InvestPenang Bhd executive committee chair-
man Datuk Lee Kah Choon said the figure may
seem low but is in tandem with the trend when
compared with the international and national
investment environment.
“We have to look in terms of the overall foreign
direct investment (FDI) at the international level to
see how much it has also reduced,” he said.
Lee said the FDI for the whole of Malaysia will
also have to be taken into account considering
the recent uncertain economic climate.
Meanwhile, he said the job situation in the
state is looking up as retrenchments have de-
clined in the last few months.
According to Lee, the retrenchment figures in
the state peaked in February this year with a total
of 1,632 layoffs but the figures have since gone
down to 222 last month.
“Based on these figures, we can say that the
job situation here has stabilised and we hope that
it will stay that way,” he said.
Lee said currently, the unemployment rate in
the state is about 3%, which is about the same as
the national unemployment rate.
“In Penang, there are actually growth in job op-
portunities in certain sectors such as the tourism
industry involving hotels, hospitality services and
restaurants,” he said.
theSun | WEDNESDAY SEPTEMBER 2 2009
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cal will to adhere to a broad-based tax system
by not giving in to pressures for multiple
exemptions or rates that will only complicate
the tax system.
Finally, if GST is applied on a broad base
that includes essential goods like food, water
and electricity, it will erode the lower income
purchasing power on their daily expenses,
especially if their wages/salaries are not
adjusted upwards.
As such, it is important to take into consid-
eration the issue of timing for the implementa-
tion. It is to avoid possible backlash as GST
can also be viewed as ‘regressive tax’.
With the current challenging global and
domestic economic environment, the fear of
potential political backlash could not be ruled
out. Thus it appears that GST may not come
into force for the next two to three years.
Anthony Dass, an economist by training, is
Head of Research at Inter-Pacific Research. The
views expressed in this article are entirely his
own. He may be reached at anthony@interpac.
com.my.
Despite being upbeat about the economic
situation, Lee said there is still no certainty yet as
“nobody is sure how sustainable the economic
recovery is going to be”.
He also said the Penang Career Assistance and
Training (CAT) Centre has a total of 2,084 job-seek-
ers registered with it and 3,730 vacancies posted
by employers.
“Out of the 2,084 registrants, we have matched
1,661 with potential employers,” he said.
The Penang CAT Centre currently offers
several training programmes in collaboration
with Penang Skills Development Centre (PSDC)
where fresh graduates can choose programmes
such as Precision Machining Technology (PMT),
Water Management Certification and Industrial
Skills Enhancement Programme (Insep) involv-
ing design and development and supply chain
management.
Successful applicants receive monthly allow-
ances of up to RM1,000 each while undergoing
the training.
“The centre is also offering an attachment
programme in collaboration with Penang Water
Supply Corporation (PBA), Penang Development
Corporation (PDC), Seberang Perai Municipal
Council (MPSP) and Penang Island Municipal
Council (MPPP).
“The total positions offered by these agencies
are 474 and we have filled 61 of these positions,”
he said.
The state government has also set aside a RM3
million fund for a micro-credit scheme to assist
the disabled, single parents or those interested
in venturing in micro businesses.