Malaysia's inflation rate normalised, 18 months after implementation of GST

KUALA LUMPUR: Malaysia's inflation rate has normalised after 18 months of implementing the Goods and Services Tax (GST), the Dewan Rakyat was told today.

Finance Minister II Datuk Seri Johari Abdul Ghani (pix) said there was a drastic hike in prices of goods in the initial stages of implementing GST, which had increased the cost of living leading to the rise in the inflation rate.

"But today we see our inflation has come to a normal level which is approximately at 2%," he said in reply to a supplementary question by Datuk Abdul Hadi Awang (PAS-Marang) who stated that although the GST implementation has prevented traders and businessmen from evading tax payment, it has caused high inflation burdening the poor especially students.

"I don't agree with that. At the start of GST we saw drastic increase in the prices of goods and products.

"Some of the reasons are because previously when the government implemented the Sales and Services Tax (SST) many traders evaded paying and when they have to fully pay GST, they hike the prices to cover the cost," Johari said.

He added that SST system was not effective as there were leakages in payment.

"When we changed it to GST, of course this system will give some rise in prices because traders who mostly don't pay SST previously or only half are now forced to pay GST in full. They can't run," he said.