Malaysians should understand that the Goods and Services Tax is one of the most efficient tax systems in the world. (FILE PIC)

I HAVE just returned from attending a conference in Zurich, Switzerland. It was my first time in Switzerland, and as expected, I was amazed by this beautiful country. But, what struck me about the country, besides its breath-taking scenery, quality watches and delicious chocolates, is simply the people’s quality of life.

From the time I arrived at the airport and roamed around the country, never did I feel scared or anxious. Everywhere I went I felt safe, even in an environment where there was no crowd and only a slight presence of police patrol.

The public transport is extremely reliable, efficient and holistic. No wonder it is considered as the world’s best connected country by rail. And, despite its multicultural nature, which consists of four main cultures and four national languages — German, French, Italian and Romansh — the Swiss, in general, live peacefully with strong social cohesion and identity. If such a concept of “1Switzerland” exists, I think their society has successfully showcased what that concept looks like in reality.

You can easily spot museums everywhere. Even the FIFA World Football Museum is also in Zurich, a city surrounded by historical landmarks and art scenes. Undoubtedly, the Swiss are very proud of their history, arts and culture, which gives them a sense of belonging and happiness to their lives. I visited the Swiss National Museum, which is the largest museum in Switzerland.

Switzerland, essentially, is a land of migration, where what binds them is not so much about having a common enemy, but rather common ideas that they generally believe and uphold. The one section in the museum that caught my attention was on religion and economy, as I got a better understanding of their famous philosophers and reformers, such as Jean-Jacques Rousseau (1712-1778), Jean-Pierre de Crousaz (1663-1750), and Huldrych Zwingli (1484-1531), whose ideas do not just influence the Swiss, but also the world at large.

But, I have to admit that Zurich is an expensive city. It is in fact at the top of the list of most expensive cities in the world to live in, based on the Cost of Living Survey conducted by the Economist Intelligence Unit (EIU). Following the current issues in Switzerland, there is no doubt that the issue of the cost of living is one of the pressing subjects despite the drop in their inflation rate. But overall, the problem remains contained. Why? The answer is pretty straightforward — the purchasing power.

According to a UBS Bank study, Zurich has one of the highest salaries in the world. In fact, on average, a Zurich resident earns US$41 (RM173) per hour, which makes their purchasing power one of the strongest in Europe, if not the world.

Upon my arrival home, the 2017-2018 World Economic Forum Global Competitiveness Index (WEF GCI) had just been released. Based on the report, Switzerland stands at the top as the most competitive economy globally. Malaysia, on the other hand, improved in ranking from 25 last year to 23 this year, out of the 137 countries surveyed. The WEF GCI measures economic competitiveness based on 12 categories, which are more comprehensive than merely looking at the gross domestic product (GDP) per se. The categories include institutions, infrastructure, macroeconomic environment, health and primary education, higher education and training, labour market efficiency, technological readiness, financial market readiness and innovation.

What is economic competitiveness? Simply put, it is about an improvement in productivity. And, productivity is crucial as it is proven to be one of the main determinants of increasing growth and income levels. As income levels go up, people’s welfare will prosper and hence, their quality of life will become better.

WEF states that, “competitive economies are those that are most likely to be able to grow more sustainably and inclusively, meaning more likelihood that everyone in society will benefit from the fruits of economic growth”.

Therefore, when Malaysia’s ranking in the WEF GCI improved this year, where specifically Malaysia has performed most strongly in financial development and in the health and primary education pillars, it says a lot about the Malaysian growth narrative.

For one, it is testament that our spectacular GDP growth figure has trickled down sustainably and inclusively, which has benefited the people. Specifically, it has dispelled some negative and pessimistic narratives about the quality of life of Malaysians as a whole.

Furthermore, the improvement of primary education is a manifestation that human capital development is at the core of the Malaysian economic agenda in the context of improving Malaysia’s quality of life in the long run.

On the issue of the cost of living, there are a few things Malaysians can learn from Switzerland. As the economy improves and eventually becomes a developed nation, it does not necessarily mean that the cost of living will be lowered. In fact, as we progress, we can expect that cost of living will go up further.

Hence, the solution to the high cost of living is not in abolishing the Goods and Services Tax (GST) — which is also in place in Switzerland as Value Added Tax (VAT) — but improving the purchasing power of all Malaysians. Malay-sians should understand that GST, or VAT, is regarded as one of the most efficient tax systems in the world.

The notion that GST has burdened Malaysians and should be abolished is politically motivated and misleading. With or without GST, Malaysians still have to pay taxes, like the Sales and Services Tax (SST) or any other form of taxes. Why single out GST?

The fact is that GDP growth
is necessary, but not sufficient. We have to find other indicators, such as the WEF GCI ranking, to complement the GDP figure, not to substitute it. We are making good progress in our quality of life, and though there are still many issues that have to be
addressed, we are on the right track towards becoming a quality and meaningful high-income society.

This is the reality of the situation today and we have to be honest about it and not keep highlighting the “bad”.

Dr Irwan Shah Zainal Abidin is Director, Asian Research Institute of Banking & Finance (ARIBF), Universiti Utara Malaysia

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