What lessons can Malaysia learn from other countries on GST implementation?

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Malaysia Can Draw Lessons from International GST Implementation Experiences

Malaysia can learn valuable lessons from other countries, particularly Indonesia and India, regarding the effective implementation and communication of a Goods and Services Tax (GST). These nations have demonstrated successful strategies for framing the consumption tax in a way that resonates with the public, focusing on how revenue generated will benefit society. The World Bank's lead economist, Apurja Sanghi, highlighted that a key takeaway is the importance of effective communication and the use of "nation-building narratives" to make the GST more palatable.
Communicating the Benefits of Revenue Mobilisation

Both Indonesia and India successfully employed narratives that linked the implementation of GST, or similar revenue-raising measures, to tangible public benefits. In Indonesia, the government effectively communicated that any reduction or removal of subsidies would be redirected towards areas of significant public concern. This approach helps to build public acceptance by demonstrating a clear link between the tax and improvements in services or infrastructure that directly impact citizens' lives.
Leveraging Past Experiences and Effective Communication

Beyond international examples, Malaysia can also draw upon its own past experience with the GST, which was introduced in 2015 and later repealed. Apurja Sanghi stressed that the concept of GST must be communicated effectively to the public. This involves clearly explaining its mechanics and the rationale behind its implementation, rather than allowing it to be solely perceived as a measure that increases living costs, as was the sentiment when it was previously in place.
Shifting Economic Focus Towards Investment

While not directly related to international GST implementation, the broader economic context provided by the World Bank suggests that Malaysia's focus on revenue enhancement should be part of a larger strategy. Sanghi noted that Malaysia's economy has become increasingly consumption-driven, with consumption accounting for about 60 per cent of GDP, a significant increase from the late 1990s. This over-reliance on consumption is seen as a structural issue, and a move towards greater investment control is recommended. Initiatives like the National Investment Aspirations aim to address this by attracting more investment into the country, complementing revenue-raising measures like a potential GST reintroduction.

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What lessons can Malaysia learn from other countries on GST implementation?

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