Chaos Expected as Manufacturers Rush to GST
Malaysian Businesses Face Daunting Task to Overhaul IT Systems as the April 1, 2015 Deadline Looms
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.