Malaysian Prime Minister Ismail Sabri Yaakob has downplayed calls for an early election, citing a rise in food prices and other living costs, Nikkei reported on May 31.
An election is not due until 2023 but Ismail Sabri has been facing pressure from some in his party, the United Malays National Organisation (UMNO), to call an early vote to capitalise on UMNO's resurgent popularity in recent local polls.
The premier told Nikkei in an interview he will wait for "the right time" to call an election, given inflationary pressures partly stemming from the Ukraine conflict.
"We are now facing a period of increasing inflation with high prices... do you think this is the right time?" Ismail Sabri was quoted by Nikkei as saying. Malaysia's central bank expects headline inflation to average between 2.2% and 3.2% this year, with food costs up 4.1% in April. Earlier this month, the central bank unexpectedly raised its key interest rate to cool inflationary pressures.
The government has introduced price control measures, but the cost of subsidies has weighed on its coffers. Ismail Sabri told Nikkei the government was keen on re-introducing a Goods and Services Tax (GST). An UMNO government introduced the GST in 2015, but it was scrapped three years later by Mahathir Mohamad's administration, after voters blamed the 6% consumption tax for rising costs.
Ismail Sabri said the government was aware of the GST's unpopularity, but had limited options, noting it had lost 20 billion ringgit ($4.57 billion) in annual revenue after the tax was abolished. The government would target a GST rate that did not burden the people, but was not so low that it "defeats the purpose of expanding tax revenue", he told Nikkei.
Malaysia is expected to spend 28 billion ringgit on fuel subsidies alone in 2022, more than double the 11 billion ringgit spent last year, in addition to subsidies for cooking oil, sugar, and flour. ($1 = 4.3730 ringgit)