KUALA LUMPUR: The country needs to look beyond debt management and recognise that it is currently in the middle of a balance sheet recession in order to rise above the problem, says Fung Global Institute (Hong Kong) president Tan Sri Andrew Sheng.
"Malaysia's debt stands at around 80 per cent and one of the biggest concerns now is the rising household debt and I believe that the upcoming 2014 Budget will be able to address this," he told Business Times at the World Capital Markets Symposium.
"There are two ways of looking at this rising household debt problem; we could raise the capacity to have income and wealth rather than just looking at the liability side, or we can recognise that the world is in a balance sheet recession and, therefore, we need to begin talking about more than just the quality of assets."
He said Malaysia's numerous traits, if properly utilised, could bring about a positive economic reform.
"Malaysia has a very satisfactory rate of growth and I am very confident that it will be able to power itself through. If you look at the investment houses' forecasts, they have placed the country among the top emerging markets that will become one of the more important economies between 2030 and 2050."
Malaysia's ongoing trade agreement with economic giant China is also key to its economic stability but Malaysia will still need to have a contingency plan.
"Chinese economy is still subject to the global scenario and as the International Monetary Fund said in its economic report, the world is going through very different transitions, risks are rising and countries should have better resources to adapt to these changes.
"China accounts for roughly 10 per cent of the world's gross domestic product and its trade accounts for 15 per cent of total Asean trade.
"Being one of the world's largest importers of components as well as commodities, any impact on China would impact the world," Sheng said.
He also addressed concerns over the implementation of the Good and Services Tax (GST), noting that there is no such thing as "timeliness" when it comes to any tax reform as all parties would not be on the same page.
"The world is moving towards value-added tax... sooner or later we will have to do it.
"Nobody likes taxes, but some are necessary. In the case of the GST, it will be beneficial to the economy in the long run," he said.