Govt to probe claims of higher cost of doing business

By ALIFAH ZAINUDDIN / Pic By MUHD AMIN NAHARUL

THE government will look into claims made by local manufacturers that the Sales and Services Tax (SST) has driven production costs by up to 10%.

A joint survey by the Federation of Malaysian Manufacturers (FMM) and the Malaysian Institute of Economic Research indicated that the cost of doing businesses among local manufacturers has risen since the implementation of the SST in September last year.

Finance Minister Lim Guan Eng said he disagreed with the findings of the survey as government data provided by the Department of Statistics Malaysia (DOSM) showed that inflation rate was kept at only 1% in 2018, compared to 3.7% when the Goods and Services (GST) was enforced.

Lim did not deny that the rapid implementation of the SST in two months had led to some problems.

However, he said the government has been taking necessary measures to ensure that the impact of price rises will be less compared to GST.

“We never said that there will be no price increases. There will be, but the impact will be less than GST.

“If there are any impediments toward the rise in production costs, we would want to investigate and examine whether it is connected to SST or other structural factors,” Lim told reporters after officiating Razer Inc’s new headquarters in Kuala Lumpur yesterday.

He said the government will be meeting with FMM soon to understand the source of their complaint as it was not backed by figures provided by DOSM.

“We use the same exact formula, the exact same weightage, so when it is 1% compared to 3.7%, the facts speak for itself,” Lim said.

FMM president Datuk Soh Thian Lai said 85% of Malaysian manufacturers have witnessed a rise in production costs due to SST in the second half of 2018.

Soh said the main factor for the higher cost was that the SST rate on raw materials, components and services are higher than the GST.

He added that another key technical issue was the lack of clarity on the application of procedures for exemption.

On a separate note, Lim said the establishment of Razer’s new office in Malaysia is in line with efforts to make the country an eSports hub in Asia.

The government has allocated RM10 million to support the development of eSports in Budget 2019.

Globally, there were 2.4 billion active gamers generating an estimated US$137 billion (RM560 billion) in revenue last year.

Malaysia is currently ranked the 21st-largest gaming market in the world by revenue, generating about RM2.6 billion in 2018.

“Razer’s decision to have a new Malaysian headquarters for its Asean expansion is testament to the value Malaysia brings to businesses looking to expand in the region.

“RM100 million has been invested by Razer to set up this office,” Lim said.

Also present at the launching ceremony were Youth and Sports Minister Syed Saddiq Syed Abdul Rahman, Lembah Pantai MP Fahmi Fadzil and Razer CEO Min-Liang Tan.