Malaysia Suggestion for Malaysia to solve its budget problem

Malaysia is facing financial difficulty. I read a report from an analyst that Malaysia depends a lot on oil revenue and that, without the revenue, Malaysia will be a bankrupt nation.

I wish to give a suggestion to the new finance minister of Malaysia, Mr. Lim Guan Eng, on how he can increase the revenue for the government and also give a lot of spending power for Malaysians.

My suggestion may help to solve the debt problem for the Malaysian govt and also increase the wealth of their citizens.

What is this suggestion?

I will describe it as - follow the successful example adopted by Singapore over the past decades.

I do not want to appear to be arrogant. This approach has also been adopted successfully by many other countries, and in particular, Australia, China, Japan - just to name a few.

My suggestion is - increase the property prices in Malaysia by 20 percent.

How can this help the Malaysian economy?

All existing property owners will feel wealthier through the increased property values of their properties. Just imagine the spending power from the newly created wealth.

How will this increase the revenue of the government?

The government can sell 99 year leasehold land at a high price. It can also levy a development charge of 20% on the value of newly developed property built on privately owned land.

It is similar to the practice in Singapore over the past decades.

The revenue that will accrue to the government will be tremendous. It will provide revenue to the government to meet its budget expenses and also, hopefully, to reduce the debt.

Can buyers afford to pay the higher prices of properties, after the development charge of 20% is applied?

The answer is - yes, look at Singapore. People are paying high prices, even for 99 year leasehold public housing. They can afford to pay the higher prices as they can get bank financing. The banks provide the financing for the higher price of the property

If you look beyond Singapore to many other countries, you will find the same phenomena.

Will this backfire? Maybe it will. Maybe it will not.

This is how I suggest the finance minister approaches the change.

The first step is to announce a policy of imposing a 20% development charge on property development that will be implemented in stages over the next three years. It will start at 5%, and followed by 5% for each following year, until it reaches 20%.

I can imagine a large flood of buyers into the property market, to catch the prices at the lower rates of development charge.

Foreign buyers will also come into the property market in droves. I am sure that the government will want to control the foreign buying in some appropriate way. The foreign buying will strengthen the ringgit currency.

Can Malaysians afford the higher prices of properties? I believe that this should not be an issue, if they can get bank financing.

I repeat - the higher property prices will make existing property owners feel well off. This will unleash a large amount of consumer spending that will be good for the domestic economy.

Will an increase of 20% in property prices be harmful to the economy? I think not. Malaysian properties will still be very inexpensive, compared to properties in Singapore and many other cities.

There will be other ramifications from this policy. I do not have all the answe

Add Comment

---