Tax Reform in Malaysia:
Trends and Options
Mukul G. Asher, Ismail Muhd Salleh,
and Datuk Kamal Salih
During the period 1960-1990, Malaysia moved rapidly from being a primary commodity producer with low per capita income to a country that was widely expected to join the ranks of the newly industrialized economies (NIEs) of Asia, such as Taiwan, South Korea, Hong Kong, and Singapore, toward the end of the 1990s. According to the World Bank, Malaysia had a per capita GNP of US$2,520 in 1991; and the average annual growth rate of per capita real GNP during the 1980-1991 period was 2.9 percent, several times higher than the 0.3 percent achieved by the middle-income economies as a group ( World Bank, 1993, pp. 238-239). According to the same source, the average annual growth rate of real GDP during the 1980-1991 period was 5.7 percent; and this growth was accompanied by a low annual rate of inflation, 1.7 percent. There was also considerable diversification of the economy during this period, with the share of manufacturing in 1976 constant prices increasing from 13.9 percent of GDP in 1970 to 27.0 percent of GDP in 1990 (Economic Planning Unit, 1991a, Table 2.3, p. 41). In 1992, gross national saving and gross fixed capital formation amounted to 31.1 percent and 37.0 percent of GDP, respectively ( Ministry of Finance, 1992-1993, Table 1.2). The large saving-investment gap is filled primarily by direct foreign investment (DFI), which has shown a sharp increase in recent years. Thus, DFI in approved projects increased from $959 million in 1985 to nearly $16 billion in 1991 ( Ministry of Finance, 1992-1993, Table 8.1). 1
Sustaining the economic performance of the 1960-1990 period is likely to require restructuring and reform in areas such as labor markets; industrial and trade policies; the financial sector; public enterprise manage
Questia, a part of Gale, Cengage Learning. www.questia.com
Publication information: Book title: Taxation and Economic Development among Pacific Asian Countries. Contributors: Richard A. Musgrave - Editor, Ching-Huei Chang - Editor, John Riew - Editor. Publisher: Westview Press. Place of publication: Boulder, CO. Publication year: 1994. Page number: 82.
This material is protected by copyright and, with the exception of fair use, may not be further copied, distributed or transmitted in any form or by any means.