CUTBACKS AND HIGHER COSTS FOR CONSUMERS?
Industry groups said they recognised the government’s fiscal objectives but have voiced concerns over the “far-reaching and potentially adverse impacts” the tax expansion may impose on small and medium enterprises (SMEs), the wider business ecosystem and Malaysian consumers.
“This move sends the wrong signal to domestic and foreign investors, raising doubts about policy consistency and the government’s commitment to fostering a business-friendly environment,” said FMBA in a joint statement with five other major business associations.
These are: SME Association of Malaysia, Malaysia Retail Chain Association, Malaysia Retailers Association, Bumiputra Retailers Organization Malaysia and Malaysia Shopping Malls Association.
The six groups urged the government to defer the expansion, citing the potential impact on Malaysia’s economy.
“Implementing such a broad-based tax hike amid a fragile recovery will exacerbate inflation, cripple SMEs, discourage investment and erode consumer confidence,” the statement dated Jun 15 read.
In a separate statement on Tuesday, Abdul Malik Abdullah, chairman of the FMBA, said that SMEs, many of which operate on thin margins and limited cash flow, would face rising input costs due to the “cascading nature” of the SST.
“Of greater concern is the fact that these economic sectors are involved in producing goods and services for end consumers, and may have to pass down some of the increased costs through market pricing,” a spokesperson from the Malaysian Institute of Economic Research also told CNA.
Some business owners are already bracing for the impact.
The owner of Salmonly Cafe in Kuala Lumpur, Nor Marsilla Ismail, told CNA that she is considering a menu revamp as she is adjusting prices and recalculating her costs and margins.
“Our bestseller item is the salmon rice bowl so we have to adapt to survive,” she said, noting that salmon prices have not yet increased, but could soon.
Salmon is among the “discretionary goods” that will be subjected to a 5 per cent sales tax rate starting next month.
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