Muhammad Ibrahim said an equitable tax system should involve value-added tax, adding that this should not become a political issue.

He said this was to ensure Malaysia has revenue options and to refrain from entering into a debt trap over the long run.

Muhammad said this was important despite the country’s debt level still being relatively low at about 50% to 60%, compared with Japan and some other countries with over 100% debt levels.

He said the debt trap would not only slow down economic growth but also affect the financial market, such as the equity and bond markets. This would lead to investors having less confidence in Malaysia, he added.

“As it is now, about 30% of the economy does not pay tax because of the nature of the tax system.

“This includes a retired person like me or others who can still afford to spend and should be contributing their part as they still enjoy good roads, airports and schools,” Bernama quoted him as saying at the 12th Malaysia-China Chamber Entrepreneurs Conference (MCEC) in Kuala Lumpur.

Muhammad noted that excessive borrowing would turn into negative or less growth moving forward.

He also spoke on the importance of having “national champions” in various economic sectors.

“We need more national champions like Petronas and Top Glove Corp Bhd to become global brands that not only create high-paying jobs but also advance the interests of the nation.”

He said a clear and cohesive plan was needed for regulated entities to become “national champions”.

Muhammad said BNM had been successful in turning domestic-centric banking institutions into regional forces to be reckoned with.

The transformation of the banking sector into a competitive industry had been a long process, with BNM nurturing these institutions into entities able to compete beyond national borders.