Malaysia’s economy expanded by 5.6% during the first quarter of 2015, falling short of some estimates but beating out most of its regional peers in Southeast Asia.
“Despite uncertainties in the global economy, we manage to perform better than others in terms of economic growth, led by domestic demand and supported by strong private consumption and investments,” said Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah.
The minister said that the country’s economic growth was higher than other countries in ASEAN, such as Indonesia’s 4.7%, Singapore’s 2.1%, and Thailand’s 0.3%.
New Tax Supports Short Term Growth
Maybank’s statistics department estimated earlier last week that the Malaysian economy grew by a strong 6.2% during the first quarter of 2015, helped by positive numbers for the industrial production and services indices.
Maybank Kim Eng Research reported a rise of 7.1% cent in their services index, compared to 6.8% during the fourth quarter of 2014. In addition, the distributive trade sector increased to 8.8% in the first quarter of 2015, helped by a surge in trading activity.
The bank’s research department said that plans for a new Goods and Services Tax (GST) spurred growth in ASEAN’s third largest economy as businesses tried and get orders completed, and necessary purchases made before its implementation.
“The pre-Goods and Services Tax has boosted activities like distributive trade, professional and computer and information services,” explained Maybank Kim Eng Research.
Malaysian consumers have also been spending more ahead of the GST, as people get large purchases out of the way to save money before the tax hike comes into effect.
The new tax was implemented as the Malaysian government seeks to reduce its dependency on state-oil company Petronas, which has historically contributed as much as 30%-50% to all tax revenue. The GST took effect on April 1st, 2015 at a rate of 6%.