Malaysia is a resource-rich country with a population of around 30 million. The surplus commodities are exported to generate revenue for the state through taxes and royalties, as well as through public ownership of the oil and gas company Petronas.
However, this fiscal model is risky in the long term as natural resources deplete and commodity prices are volatile. The government is now looking to pivot away from petroleum as a major source of revenue and develop a diversified tax base.
In the 2024 budget, Malaysia aims to shift towards a more tax-based revenue model, increasing the contribution of taxes to the total revenue. The plan is to rely less on petroleum and export-based revenue and increase corporate income tax as a major source of revenue.
The government also seeks more balanced growth driven by investment, business activity, and consumer spending to establish a sustainable tax base. With total government expenditure projected to decrease, the government is seeking foreign investment and implementing progressive wage schemes to increase consumer purchasing power.
The 2024 budget indicates Malaysia’s intention to rebalance the economy away from petroleum exports and make investment, consumption, and business activity more prominent engines of growth.