By FARA AISYAH / Pic By TMR
Retailers need more details on the reinstatement of the Sales and Services Tax (SST) before they can fix prices of their products, said Retail Group Malaysia (RGM) MD Tan Hai Hsin.
“To decide whether retailers will increase their prices or not, the government needs to release more information on the implementation of SST, not during the last minute. As of now, Finance Minister Lim Guan Eng had only mentioned that rates of the SST will be 10% for sales and 6% for services,” Tan told reporters at a media briefing in Kuala Lumpur yesterday.
He added that details are needed to examine its impact on the retail market.
Citing essential items that were previously exempted from the Goods and Services Tax (GST), such as baby formula and cooking oil for example, Tan said retailers need to know whether these items will now be taxable under the SST.
Additionally, he said private sector operators, including trade associations, need to inform the consumers on whether they will increase the prices or not.
“Trade associations should get consensus from their members and explain whether their members will increase the prices or not, and why,” he added.
While it is important for the government to educate the buyers on the impacts of SST, Tan opined it is equally important for businesses to explain to the consumers their reasons on increasing, or lowering their prices.
“If not, people will just stop buying like what happened when GST was first implemented in 2015,” he added.
When GST was first implemented on April 1, 2015, the retail growth rates for the second quarter of the year (2Q15) dropped significantly to -11.9%, which was the worst rate since 1998.
Beginning Sept 1, 2018, when SST is re-implemented, Tan expects retail prices to increase compared to the three-month tax holiday period.
He also expects retailers to offer aggressive discounts to get consumers to spend more.
Retail sales are also expected to drop significantly during the first two months of the SST implementation, and will recover in November, in conjunction with the school holiday and festive season.
Meanwhile, in conjunction with the Hari Raya celebration, along with the tax holiday, RGM has adjusted the 2Q18 retail growth rate from 3.7% estimated in March 2018 to 6.3% for June 2018.
The retail sales growth rate for 3Q18 has also been revised from 5.2% estimated in March 2018 to 6.8%, following the remaining two months of the tax break.
For 4Q18, the retail growth rate has been revised downwards from 5% estimated in March 2018 to 3.5%, to reflect higher consumers’ spending during the three-month tax break.
Based on the latest quarterly adjustments, the projected retail sales growth rate of the Malaysian retail industry in 2018 has also been revised upwards from 4.7% estimated in March 2018 to 5.3%.