星洲日报

东方日报

SERC Media Briefing on Quarterly Economy Tracker (Oct-Dec 2025) & 2026 Outlook

To view the Executive Summary of QET, please follow the link below:

2026 Outlook: Resilience and Adaptation

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南洋商报

南洋商报

For news coverage, please proceed to Activity page.
https://www.acccimserc.com/activities/activity-20260109

A. WORLD ECONOMIC OUTLOOK UPDATE

Defying Gravity?

• The year 2025 was the end of the beginning. The global economy has performed much better than feared, cruising at a soft speed estimated 3.1% in 2025 (3.3% in 2024) as the impact of the US Liberation Tariffs and heightened uncertainties on growth and supply chains have been limited thus far amid the persistence of geopolitical tensions.
   
• Looking ahead to 2026, with so many moving parts in the global and domestic economy, will the world economy in 2026 continue to remain resilient, continued transition or disruption?
   
• Geopolitical risks remain significant, driven by new rules in trade and investment, with the US and China being two strategic rivals of current global fragmentation, particularly in trade, technology, and governance, leading to competing economic and political blocs as well as supply chains security.
   
• The real impact of a shift in trade policy and economic policy uncertainty on the global economy, trade and investment flows will become clearer in 2026. Trade conflicts, increasing populist policies, and intense focus on securing critical raw materials for technology, advances in AI and green transitions would trigger potential market volatility in the years ahead.

B. MALAYSIA ECONOMIC OUTLOOK UPDATE 

Charting Malaysia Outlook 2026 – Resilience and Adaptability

• The year 2025 ended with the impact of heightened external uncertainties emanating from the US Reciprocal Tariffs and ongoing geopolitical conflicts on global growth being limited and lower than expected. 
   
• Against the backdrop of a global economy performing better than feared, the Malaysian economy has demonstrated resilience to achieve an estimated 4.7% for the full year of 2025, though it has moderated from 5.1% in 2024.
   
• Looking ahead to 2026, with so many moving parts in the global and domestic economy, what will define the year 2026? The net impact of a shift in trade policy and economic policy uncertainty on the global economy, trade and investment flows will become more apparent in 2026.
   
• We expect continued global economic expansion, estimated 3.0% in 2026, supported by easing trade uncertainty, lower energy prices, a further cautious pace of monetary easing against inflation risk and easier financial conditions.
   

南洋商报

南洋商报

The Star

Assessing the Need of Reintroducing Goods and Services Tax (GST) in Malaysia

The reintroduction of the Goods and Services Tax (GST) in Malaysia has been a subject of policy debate, particularly in broadening the tax base, strengthening tax efficiency, while ensuring a sustainable and stable source of fiscal revenue.

This report is to discuss reasons for the reintroduction of the GST and factors to consider if the GST were reintroduced. On a net basis, GST has more positives than negatives, and is proven to be a better tax system as it is more effective, efficient, and transparent. It is widely acknowledged to be business friendly and could spur economic growth as well as increase industry competitiveness in the global market.

GST can boost tax revenue collection given its broader tax base as evidenced in the collection of an average RM42.7 billion per year during the full-implementation period 2016-2017. This was higher than an average of RM29.4 billion per year collected from the Sales and Service Tax (SST) in 2019-2023.

A key consideration in the long-term tax strategy is aligning GST with a broader tax reform agenda, that is shifting from direct taxes to indirect taxes, by decreasing direct tax rates and increasing indirect tax rates. Malaysia’s current headline corporate income tax rate at 24% is uncompetitive compared to regional peers though the Government has argued that our effective tax rate is much lower given the generous tax incentives, deductions, exemptions, reliefs and capital allowances. The current worldwide trend is shifting from direct taxes to indirect taxes. Many countries that have implemented GST or value-added tax (VAT) to ameliorate the burden of indirect taxes by lowering direct taxation.

The primary concern regarding GST is that it will increase inflation, and higher prices of goods and services, resulting in high cost of living, impacting the low-income households. It is reckoned that there were price increases when the GST was introduced. However, these concerns can be mitigated by expanding the zero-rated scope for essential goods and services, direct cash assistance to the targeted vulnerable groups, and implementing robust price monitoring mechanism to rein in excessive price increases. Strengthening consumer awareness initiatives will enhance public confidence in GST and anchoring inflationary expectations.

A crucial factor in ensuring its smooth implementation will be businesses’ readiness and robust technology infrastructure. ACCCIM’s survey indicated that businesses would need at least 6 to 12 months of preparation for the GST. Compliance concerns, including cumbersome procedures and high costs, must be addressed through improved GST refund mechanisms, streamlined reporting processes, and user-friendly filing systems. Businesses expect the government’s support in areas such as financial grants for system upgrades, tax holidays, and comprehensive training programmes.

In conclusion, a strong narrative backed by an extensive education programme is key to an effective reintroduction of GST for ensuring a sustainable revenue mechanism. Clear guidelines, price surveillance and anti-profiteering enforcement, and stakeholders’ engagement are essential in securing public and business confidence in the GST.