Malaysia's credit rating downgrade to Negative and how to fix it

It was bound to happen eventually - the lax way the government wastes money, leakages everywhere and so on.

In the long run, this downgrade is probably a good thing. It is a wake up call that we have to DO SOMETHING concrete to move our economy to the next step!

Off the top of my head, with but a stroke of a pen, the government should:

1. Impose GST - not just to broaden the tax base but to create more oversight into businesses; lets face it, there's way too much cooking of the books. How can business tax be almost equal to personal income tax? (Govt tax revenue sources by petroleum: business: personal is roughly 33:35:32)
2. Shut down / tightly control the money changers and remittance houses - they are the key channel for fund leaving the country under the radar. Banks have to monitor and report to Bank Negara on fund flows but these organisations don't have to. Why? And it's already proven that funds from corruption by politicians have left the country this way. So bloody well go and STOP IT.
3. Shut down or force the licensed money lenders to go under BAFIA - put them under Bank Negara, not the Ministry of Housing. Put them all under AML surveillance - that will put a curb to money laundering and excessive profiteering on high interest. And ensure proper reporting and taxation of their profits.
4. Impose NO merchant discount rate charge for transactions below RM50 or RM100 to encourage cashless transactions and allow banks to charge higher cash handling fees - this will force more cashless (either debit or credit cards, or contact-less payment like Touch'n'Go) transactions in the economy. Less physical cash and more electronic cash = more funds in the white economy, i.e. in the formal banking system. This allows better oversight and better evidence for taxation
5. Controversially: Legalise some of the vice trade such as the "escort" industry - if done PROPERLY (which unfortunately, is not always possible here) then there are several benefits: more tax for the government, better health controls over the sex workers, legal protection for sex workers (it is not an ideal job but at least we can ensure that they are not exploited by both their pimps and the police!).
6. Review the case law on commercial cases - especially the one about the Siamese lady and her land being cheated by someone, that ruling follows the letter of the law but is in flagrant disregard of natural justice.

Honestly, none of the above will happen (except maybe no 1 & 4) because there is too much vested interest in the current system to not want to change it (especially no 3 & 4) and no 5 is something no politician will touch for fear of alienating their sanctimonious voters even though logically it is the right thing to do (just not emotionally/religiously (note: sanctimoniously religious)) - ok enough parentheses.

So what to do? Just have to be smart about it, invest in things that can still grow in value and sit tight - wait for the dark days to pass; all this is temporary.