SINGAPORE (May 3): In a TV interview on April 11, UBS economist Kelvin Tay blamed “political paralysis” in Malaysia for landing the country in an economic bind that includes a “current account deficit” of higher than 3.4%.

Tay also said that abolishing the Goods and Services Tax (GST) — which was to have brought in RM36 billion ($11.8 billion) in revenue for the government in 2019 — was “just a bad move, because it means the country is going to be very, very reliant on oil”.

The interview went viral and Tony Pua, Malaysian finance minister Lim Guan Eng’s political secretary, went on the warpath. Pua pointed out that it was, in fact, Malaysia’s fiscal account that was in deficit, not its current account.

Pua also noted that Malaysia had a diversified economy, and was not dependent on oil. However, oil and gas revenue is forecast to account for 30.9% of government revenue in 2019. Excluding a one-off special dividend from Petronas, the underlying contribution to government revenue from oil and gas is about 22%.

Pua criticised Tay for being “biased and factually incorrect” and admonished the business news outlet that aired the interview. And a few days later, UBS issued a clarification that said Tay had misspoke, using the “wrong terms” in describing the Pakatan Harapan (PH) government’s current account deficit, when he actually meant fiscal deficit.

Pua’s aggressive rebuttal of Tay’s comments on Malaysia came amid growing scepticism in financial markets that the PH government is capable of addressing the country’s debt overhang and engineering a recovery while deflecting political attacks from Malay-dominated opposition parties.

Find out more about how Malaysia has fared one year after the PH government won the elections in this week’s issue of The Edge Singapore (Issue 880, week of May 6), on sale now at newsstands. Subscribers can log in and read the story or click here to subscribe.