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KUALA LUMPUR, Jan 8 — Malaysia’s shadow economy is uncommonly high for a developing country, observed Lim Guan Eng.
The finance minister said that in developing countries, the shadow economy normally takes up 12 per cent of the nation’s gross domestic product (GDP), but in Malaysia, that percentage is a lot higher.
“When we talk about shadow economy, in most economies it is around 5 per cent. In developing countries, it is around 12 per cent but in Malaysia, it is very high. It is around 20 per cent of our GDP.
“When talking about the shadow economy, it is because of corruption, smuggling and all these unreported incomes. The Inland Revenue Board (IRB) is looking to increase our income but we are doing it in a softer, gentler approach through continuous engagement.
“We are not going to do it like the previous government, raiding people’s houses wearing balaclava and carrying M-16s,” said Lim.
He explained that corruption and smuggling which had led to public distrust in the government and its financial institutions were behind the strong shadow economy.
He added that 1MDB alone was worth RM52 billion and the current Pakatan Harapan administration had to fill up a RM150 billion hole left by the previous Barisan Nasional regime.
On a related matter, Lim reiterated that the government’s tax revenue target for 2020 still remains at RM155 billion.
Last year, the IRB had successfully collected RM145 billion, which is a six per cent or RM8 billion increase when compared to 2018.
