Tax reforms vs citizen comfort: how Malaysia and Indonesia walk a tightrope
The major Asean economies aim to strengthen fiscal health while easing the burden on citizens, though some public backlash may be inevitable
INDONESIA and Malaysia are emerging as bold reform leaders in Asean, with Indonesia set to selectively raise its value-added tax (VAT) next year and Malaysia revamping its longstanding fuel subsidy system.
Both countries are walking a tightrope between boosting revenues to strengthen resilience and easing the burden on citizens. This is no easy task, especially amid intensifying economic headwinds across South-east Asia, with rising living costs and strained household budgets.
Indonesia’s controversial plan to raise its VAT from 11 per cent to 12 per cent in January 2025, when implemented, will bring the country in line with the Philippines, which currently holds the highest VAT rate in Asean.
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