The report, jointly prepared by the United Nations Development Programme Malaysia and the Malaysian Industry-Government Group for High Technology, described Putrajaya’s initiative in implementing a capital gains tax and raising the service tax to enhance revenue as an “innovative solution”.

“Despite fiscal constraints, innovative solutions are underway, including the introduction of a capital gains tax, increases in services tax, the launch of the Padu central database for subsidy rationalisation, and pension reforms,” it said.

The report also highlighted significant investments such as RM24.9 billion in Kulim, Kedah, to drive reindustrialisation and create new economic opportunities.

These initiatives reflect Malaysia’s dedication to economic transformation and resilience, aiming for a more robust and diversified future, it added.

When tabling Budget 2024 last year, Prime Minister Anwar Ibrahim announced that the service tax rate would be raised from 6% to 8% from March 1 in selected sectors such as logistics, brokerage, underwriting and karaoke services.

Under the budget, the disposal of unlisted shares by local companies will also be subjected to a 10% capital gains tax.

On Jan 2, meanwhile, Anwar launched Padu, intended as a central database for the implementation of targeted subsidies, which remains a key government priority for 2024.

In terms of pension reform, Anwar said the elimination of pensions for new civil servants and politicians would allow the government to manage its financial obligations more effectively and secure a stable economic future.