Monday, 21 December 2009

GST – the compelling reason

If I were to tell you that Malaysia desperately needs GST, what would be your reaction? Would you think that it’s because our country needs the money? Perhaps… but there is a more compelling reason…

In order to dwell into this notion, we need to digress a little… to this thing called “credit rating”.

Do you know that each of us have our very own credit rating? When we apply for loans, mortgages or credit cards, the banks will approve or reject our application based on our credit rating. It basically measures whether one is worthy to be give a loan or otherwise.

Besides individuals like you and me, companies also have their own credit rating. When companies apply for loan, their credit rating will be assessed, just like individuals.

Now, do you know that a country also has a credit rating? It is known as the “Sovereign Rating”. Essentially, it determines whether a country will be able to borrow from others. The poorer a country’s Sovereign Rating, the more difficult a country will be able to borrow from others.

Do you still remember when I blogged about the
2010 National Budget where I mentioned that if Malaysia is a company, it will be a company which has been running on losses for quite a number of years running due to continuous budget deficit situation? That is to say, this company called Malaysia has been borrowing in order to keep going. And to continue to borrow when you have been borrowing for a long time, a country needs a strong Sovereign Rating.

Here lies the problem. With the country continues to run on a high budget deficit situation (i.e. loss), the world governing authorities have “heavily hinted” (actually, I would prefer to use the word “threaten”) to downgrade our country’s Sovereign Rating.

My friends… this is no laughing matter. I can't even think of words to describe the magnitude of this, if it happens. I am sure all of you, in your own intellectual ways, will piece together the consequences, if it happens.

And so, in order for a country to enhance (in our case --- to preserve) one’s Sovereign Rating, a broad-based consumption tax mechanism has to be put in place. I have to be honest here, I am actually not sure if this is a prescribed rule or a directive from the world governing authorities. One thing for sure, this is where GST comes in.

Trust me, if you are a Malaysian, you do not want our country’s Sovereign Rating to be downgraded. Don’t get me wrong, I am not supporting GST. Definitely not, particularly when we all know the level of efficiency on how the money collected will be spent.

I am just saying that we are where we are today because we are in a very screwed-up situation. And why are we in this screwed-up situation? Well…
sam jiu lah…


1 year ago…
The reality of reality shows

2 years ago…
The fear evolutionDo you believe in miracle?Marriage brownies points

12 comments:

Mabs N Cals said...

well this GST thingamajig has certainly come up to balance on something. In the long run it has some adverse effect in some other ways. I truly am not entirely in a plus in this.

The credit ratings are a direct reflection on a country's balance sheet.

Maybe sam jiu in spending less for other irrelevant things in our company of ours.

What say you, my friends?

InjusticeSistem said...

Using GST to 'enchance' our Sovereign rating is like a disaster method to delay the inevitable original disaster in da 1st place....ie....
My roof is leaking water but instead of fixing the leaking roof, i'll just use 1 pail to collect the leaking water and place the pail at the top of a ladder under the leaking spot, make an overflow opening at the pail so when the pail is almost full water can flow out thru it, connect the overflow opening with a pipe n lay the pipe diagonally across my living room all the way to the toilet.
U FEEL me?
Just fix da blardy corruption and da blardy NEP n we will not hv anymore budget deficit.

PS: with the above rainwater collecting strategy, da gomen can even claim they are able to recycle rainwater..."APPLAUSE"

MKL said...

Zewt, however your country will be downgraded, I as a lover of Malaysia truly Asia, will always return because of the yummy nasi-lemak, bak-kut-teh and char-kuey-teow. ;)

Anonymous said...

industrymain frequent angular apricots look tarun generating conversion possess reuse idea
semelokertes marchimundui

Anonymous said...

yalah, we are in a screwed up, f*cked up, messed up situation la...sam jiu lah....

malaysia sucks la, australia the best.

i think all your readers get the point

"Joe" who is constantly craving said...

interestin fact, something i havent heard off (despite being so called well versed)

but i do know tat the wto has called msia to implement on an urgent basis, whether its for sovereign ratings, maybe?

eiling lim said...

We wouldn't be in this screwed up situation if our"screwed up politicians" didn't do what they did! It's them who screwed us up!

Jerine said...

Malaysia is not a poor country. We have resources. The only problem is mismanagement of funds. Where did all the money go?

suituapui said...

We have been paying ++ at hotels and restaurants for a long time now - 10% government tax and 5% service tax...and even at fast food joints like McDs and KFC. How will these be affected by the GST?

It is a lot higher in other countries - 12.5% in NZ, 10% in Oz...so 4% isn't that much. When things become expensive, just spend less...or better still, don't buy. Most of the time, it's a question of needs and wants. Here, we have 10% gaming tax...and nobody's complaining - just look at the crowds and the jams three times a week and sometimes more!

zewt said...

Mabs N Cals - if we are spending 40k for a computer and 10k on a screwdriver... GST will not save us i can tell u.

InjusticeSystem - well, we all know the answer, but are we, as individual doing anything to make a difference? many are not... many just know how to comment... like the anonymous of this post.

MKL - hahaha... becos when you bring over your euros... it will be dirt cheap!

anon @ 22/12 9.35am - hmmm...

anon @ 22/12 1.16pm - you are convincing me by the days that your level of maturity is farrrrrr from... wait, what maturity?

anon @ constantly craving joe - hehehe... well, only the right industry will know this point. i also heard that a broadbased consumption tax is the pre-requisite to attain developed status...

eiling lim - we have a part to play if we were to ponder about it.

Jerine - gone... without a trace.

suituapui - that is why you need to continue to read azaig. i shall review everything... but by bit... slowly. if i one shot tell u everything, you all will fall asleep man!

suituapui said...

Haiz!!! Just like those Cantonese...or Korean...or Japanese dramas on tele! Hahahahaha!

zewt said...

suituapui - hahahaha... of cos!