Malaysia to introduce sales and service tax after effectively scrapping GST

Malaysia’s finance ministry said the shortfall in revenue will be supported by specific revenue and expenditure measures that will be announced soon, including the reintroduction of the sales and service tax. (Reuters)
Updated 17 May 2018
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Malaysia to introduce sales and service tax after effectively scrapping GST

KUALA LUMPUR: Malaysia said it will introduce a sales and service tax (SST) to partly offset the shortfall in revenue from effectively scrapping a goods and service tax (GST) from June.
The Mahathir Mohamad-led government, which won last week’s general election, said on Wednesday it would lower GST to zero percent from June 1. Ousted leader Najib Razak had introduced the tax in 2015 amid lower oil prices.
In a statement on Thursday, the ministry of finance said the shortfall in revenue will be supported by specific revenue and expenditure measures that will be announced soon, including the reintroduction of the SST.
“Fiscal reform is being implemented. Expenditure reduction will begin with rationalization and efficiency measures and reducing leakages,” the statement said.
It did not say when the sales tax will be introduced.
Brian Tan, a Singapore-based economist with Nomura, said the timing of SST implementation was a concern.
“It is a question of how quickly you can bring (the SST) back. In the intervening period of the removal of GST and the return of SST, there is obviously going to be a gap in revenue. The question is how long and large will that gap be,” he said.
The finance ministry statement also added that rising oil prices will provide short-term fiscal space.
“No doubt (the higher oil price) is helpful but the problem is that it may not be enough. It is important that they bring in the SST soon,” Tan said.


Iraq’s southern oil exports hold near record in January

Updated 21 min 17 sec ago
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Iraq’s southern oil exports hold near record in January

  • Southern exports so far in 2019 close to 3.6 mbpd — tracker
  • OPEC-led oil supply cut deal started in January

LONDON: Oil exports from southern Iraq are holding close to a record high so far in 2019, according to shipping data and an industry source, which could raise questions over whether OPEC’s second-largest producer is following through on a deal to cut output.
Southern Iraqi exports in the first 21 days of January averaged close to 3.6 million barrels per day, according to tanker data on Refinitiv Eikon and separate tracking by an industry source. That’s close to December’s 3.63 million bpd — a monthly record.
The figures suggest there is little sign yet of lower supplies from Iraq, despite a deal by the Organization of the Petroleum Exporting Countries and allies to reduce output by 1.2 million bpd as of Jan. 1 to support the market.
“So far, no cuts,” the industry source said on Monday of Iraq’s export rate.
The south is the main outlet for Iraq’s crude. An Iraqi official, the director of Iraq’s Basra Oil Company, on Jan. 11 gave similar figures for January exports to those suggested by the tanker data and source.
Iraq, which has been expanding its oil export capacity, was reluctant to join a previous OPEC-led supply cut effort which began in 2017 and was at times OPEC’s least compliant member with the initiative.
To be sure, the OPEC-led deal applies to production, not exports. It is possible that Iraq could have cut production and maintained exports from crude held in storage, or reduced supply to domestic refineries.
Nonetheless, oil traders and analysts will be looking at exports to gauge whether the deal is lowering supply to the global market. So far, Iraq’s shipments abroad from the north haven’t declined significantly either.
Iraq’s northern exports appear to have held steady in January at about 400,000 bpd, according to tanker data compiled by Reuters and the industry source. That is still far below levels of more than 500,000 bpd in some months of 2017.
Baghdad says it will stick to the accord. Oil Minister Thamer Ghadhban said on Jan. 4 Iraq would keep production at the level of its OPEC target in the first half of 2019.
Under the deal, Iraq agreed to cut production by 141,000 bpd to 4.512 million bpd as of Jan. 1.