Chaos Ex­pected as Man­u­fac­tur­ers Rush to GST

Malaysian Businesses Face Daunt­ing Task to Over­haul IT Sys­tems as the April 1, 2015 Dead­line Looms

HWM (Malaysia) - - REPORT -

iCon­tro Soft­ware Sdn Bhd (‘iCon­tro’), a lo­cal En­ter­prise Re­source Plan­ning (ERP) brand and provider, fore­sees that businesses across all sec­tors, par­tic­u­larly the hugely ERP-re­liant man­u­fac­tur­ing sec­tor, will be launched into a “chaotic pe­riod as never seen be­fore, in rush­ing to re­place their un­work­able legacy ERP sys­tems” due to the govern­ment’s fi­nal re­solve to im­ple­ment the 6% Goods and Ser­vices Tax (GST) to re­place the cur­rent sales and ser­vices tax.

iCon­tro CEO Frank Lee said that there will be im­mi­nent chaos that will hit the lo­cal man­u­fac­tur­ing scene – start­ing as early as the first quar­ter of 2014, and car­ry­ing on un­til the last minute prior to the na­tion’s Goods and Ser­vices Tax (GST) im­ple­men­ta­tion dead­line on April 1, 2015.

An April 2012 sur­vey by the Fed­er­a­tion of Malaysian Man­u­fac­tur­ers (FMM) shows that over 60 per­cent of businesses re­sponded that they were ready to im­ple­ment GST, while 40 per­cent in­di­cated that only ba­sic prepa­ra­tions have been made.

Deloitte Malaysia more closely es­ti­mates that less than five per­cent of businesses have started get­ting them­selves ready.

Lee added that the in­tro­duc­tion of GST is even more com­pli­cated for Malaysia’s man­u­fac­tur­ing sec­tor be­cause the ERP sys­tem will need to ac­cu­rately iden­tify and cap­ture the tax im­posed or ex­empted de­tails at var­i­ous raw ma­te­rial pro­cess­ing stages of the fin­ished goods that are be­ing man­u­fac­tured.

Ac­cord­ing to iCon­tro, there are over 150 coun­tries world­wide that have adopted GST, two of which are Sin­ga­pore in 1994 and Aus­tralia in 2000. Aus­tralia em­u­lated Sin­ga­pore in GST adop­tion and im­ple­men­ta­tion. De­spite hav­ing a much more ma­ture and or­ga­nized busi­ness cul­ture com­pared to Malaysia, Aus­tralia took al­most three years to fi­nally sta­bi­lize a work­able model.

Frank Lee, CEO of iCon­tro Soft­ware Sdn Bhd.

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