FMM welcomes the recent announcement by Minister of Finance Tengku Datuk Seri Zafrul Tengku Aziz on the possibility of reinstating the GST by reviewing the weaknesses of the existing Sales and Services Tax system and improving upon the former GST system implemented in 2015. — Bernama photo
KUCHING (January 26): The Federation of Malaysian Manufacturers (FMM) welcomes the possible reintroduction of the Goods and Services Tax (GST) towards economic recovery and growth.
This comes as Malaysia’s debt is expected to increase further to hit 66 per cent of Gross Domestic Product (GDP) by end-2022, up from 61 per cent in 2021 and 60.7 per cent in 2020.
According to FMM president Tan Sri Soh Thian Lai, this situation is worrying as the debt servicing burden is significant at 17.2 per cent of total projected revenues for the year with no stable inflow but high outflows of government expenditure due to higher allocation for Budget 2022 stimulus and recovery initiatives to support the country recover from the impact of COVID-19 and the Movement Control Order.
“Given the weak domestic and external environments brought about by the Covid-19 pandemic, we believe that priority should be given to strengthen the economy and restore more favourable business conditions,” he said in a statement.
“In this regard, FMM welcomes the recent announcement by Minister of Finance Tengku Datuk Seri Zafrul Tengku Aziz on the possibility of reinstating the GST by reviewing the weaknesses of the existing Sales and Services Tax system and improving upon the former GST system implemented in 2015.
“FMM has been a strong supporter of the GST regime as we are of the opinion that the GST is a more transparent and effective tax regime compared to the Sales and Services Tax (SST). Over 160 countries have implemented the GST regime due to its fair tax structure.
“More importantly, prices of Malaysian exports will become more competitive on the global stage as no GST is imposed on exported goods and services, while GST incurred on inputs can be recovered along the supply chain.”
Based on a survey carried out by FMM on the reintroduction of the GST in May 2020, 499 companies which responded to the survey registered their strong support for the GST to replace the current SST.
The manufacturers have also proposed improvements to the GST to be more consumer- and business-friendly such as reducing the GST rate to 3.0-4.0 per cent to boost business conditions, which would lead to higher investments and employment opportunities, as well as higher disposable income for the people.
The survey findings proposed improvements such as ensuring proper mechanism is in place to monitor price control and anti-profiteering in the market when the tax system is reintroduced.