KUALA LUMPUR: Malaysia wants to maintain its fiscal health to ensure its sovereign credit rating remains within the "A" band, Prime Minister Datuk Seri Najib Razak said.
"It is essential to keeping down our deficit; to keeping government debt below our self-imposed level to 55 per cent of GDP (gross domestic product)," Najib said at Invest Malaysia 2018 conference here today.
He added that if the country's ratings were downgraded, lending costs for all, including business and individuals seeking loans, would increase.
"All would suffer," Najib said, adding that the Goods and Services Tax (GST) had shielded Malaysia from the economic setbacks.
He said the GST, together with the decision to reduce reliance on oil and gas revenue, was difficult but necessary and far-sighted.
"It was not popular, but it was the right thing to do. There is a reason that over 160 countries around the world implement a similar tax, and that is to ensure a wide enough tax base, one that can withstand fluctuations in the global economy," he explained.
Najib noted that other countries had followed suit, such as India – as well as two of the richest countries in the world, Saudi Arabia and the United Arab Emirates.
"The fact that they have introduced their own versions should put the lie to the idea that we could just abolish or zero-rate GST. Never mind how we would replace the RM41 billion collected from GST last year," he added.