KUALA LUMPUR: The government is determined to clean up its accounts and make the public sector more transparent in finances, said Finance Minister Lim Guan Eng.
He said for a start, the government was committed to a shift from cash-based to accrual accounting standards by 2021.
“This move will involve a transition period of five to seven years and will inculcate the necessary fiscal discipline in the current and future government,” he said in a special address at the Malaysia: A New Dawn 2018 Investor Conference here today.
Lim said as part of the government’s reforms to strengthen its fiscal position more systematically, the Public Finance Committee had been established with the mandate to strike a balance between the government’s commitments to fiscal consolidation and its needs to make continuous productive spending and investments.
Citing an example, he said clear cut white elephant projects such as the Multi-Product Pipeline and the Trans-Sabah Pipeline projects, expected to cost more than RM10 billion, had been cancelled.
“There are also many mega infrastructure projects which we recognise as crucial towards productivity and economic growth for Malaysia, including the rail-based public transport projects such as the Light Rail Transit 3 and Mass Rapid Transit 2.
“For these projects, we have every intention of continuing but we are committed to ensuring that there is no unnecessary and excessive scope, while also ensuring that the costs are reasonable,” he said.
Meanwhile, Lim said in adhering to fiscal discipline, the government in its 2019 Budget, would be announcing new tax measures.
“We want to push for cost optimisation and efforts to boost revenue,” he said, adding the nation’s fiscal health needed three years to be restored.
In the medium term, the government will remain strictly on the path of fiscal consolidation as it reforms its institutions, increases revenues, optimises expenditure, and rationalises debts.
The economy, Lim noted, would remain on a steady growth path driven by both domestic and external demand, with the government prioritising policies to drive expansion.
Over the longer term, the government’s focus is to ensure that it will have sufficient and stable sources of revenue for the country’s development, which led to the establishment of the Tax Reform Committee (TRC) to undertake a comprehensive review and reform of the overall tax system.
Lim said the TRC had been given the mandate to minimise the tax gap, diversify tax revenue and make the tax system more efficient, neutral and progressive, on top of exploring ways to minimise tax leakages and evasion.
“The same committee will review all tax incentives given out previously to ensure these measures are still relevant in supporting high-quality economic growth,” he added.