GST: Relief for some, burden for the rest

COMMENT | The news that the China Communications Construction Company (CCCC), which is building the controversial East Coast Railway Line (ECRL), was given an estimated RM3 billion GST relief hit the public like a bombshell.

Government spin doctors tried to make light of the whole issue, but for ordinary Malaysians trying to make ends meet, it was a bitter pill to swallow.

It reeked of unfairness: Malaysians have to pay GST on almost everything while a super-rich, well-connected PRC multinational gets a RM3 billion gift.

And they were not the only ones who were upset. The president of the Class F Bumiputra Contractors Association questioned why smaller companies have to pay GST on all their construction costs, while a big company like CCCC is exempted. The Malay Economic Action Council also considered the exemption unfair to local firms.

Concession after concession

Clearly, the government has an obligation to explain why taxpayers, local companies, and even state governments are obliged to shoulder the burden of GST, while a well-connected foreign corporation gets preferential treatment.

It cannot simply dismiss these concerns by saying that it is for the benefit of the people, or to reduce costs, or that former prime minister Dr Mahathir also did it.

What is worse, CCCC’s GST exemption comes on the heels of already highly favourable terms extended by the government to the company.

In exchange for soft loans (not investments, mind you, but loans which must be repaid) to build the railway project, China gets to design, construct and supply all the materials and rolling stock for the project. It even gets to bring in its own labour force from China.

Of course, the government keeps insisting that the ECRL is a viable project that will somehow magically transform the east coast into an economic powerhouse, but it has yet to provide convincing data to support its claims.

In fact, the available evidence suggests that the ECRL will never be able to support itself, and like KTM, will come to be dependent on the taxpayers to stay afloat.

Why we keep giving China concession after concession is a mystery, to put it mildly – part of the madness that we find ourselves in with so many of these...