CYBERJAYA, April 16 — Tun Dr Mahathir Mohamad today said he is puzzled why Malaysia’s policies favour imports over exports.

The prime minister said the taxation system must change to give local businesses and industries the edge over foreign firms as this will help develop Malaysia’s economy further.

"The government strategy or policy, it seems, is to encourage imports rather than exports. We are not even serving our own country.

"So we will need to change the policy of the government, and this may involve re-planning the taxation for particular industries, so that more products will be produced locally, and we will reduce imports,” Dr Mahathir told a forum after attending the Malaysia Rail Industry Corporation (Maric) annual general meeting at the Malaysian Industry-Government Group for High Technology Partnership Hub here.

The PM was asked by one forum participant to explain the import duty imposed on local developers involved in the construction of the Light Rail Transit (LRT) and Mass Rail Transit (MRT) infrastructure projects when foreign companies are exempted and if the government would do anything about it.

The participant, whose name is not known, pointed out that local companies were also hit by the Sales and Service Tax (SST), which he said made it harder for them to thrive.

Dr Mahathir said that the onus is on companies to attract customers in a free market, saying the government cannot compel customers to use only particular businesses.

"As they say, you can lead a horse to water, but if the horse doesn’t want to drink the water, there is very little you can do about it,” he said.

Today’s forum was organised by Maric.