Announcement earlier than expected — Maybank IB
KUALA LUMPUR: Maybank IB Research said the announcement on the zero-rating of the Goods and Services Tax (GST) came earlier than anticipated, adding that it expected comprehensive measures to be announced via a supplementary/mini budget following the briefing by the Council of Eminent Persons on Tuesday.
In a note yesterday, the research firm said it was also expecting an announcement on the reimplementation of the Sales and Services Tax (SST), noting that it could only be done when the Parliament convenes.
“Under Budget 2018, this year’s expected GST revenue is RM43.8 billion, thus the zero-rating implies a shortfall of RM25.6 billion on a simple pro-rated basis,” it said.
However, it noted that there would be several mitigating factors, such as the oil-related revenue forecast of RM37.7 billion amid rising crude oil prices, the reintroduction of the SST and the government’s move to reduce wastage and leakages.
The research firm said the biggest-beneficiary from the abolition of the GST would be the consumer-related sectors, adding that “standard rated” consumer products should, in theory, see prices reducing by about six per cent.
“We expect this development to provide a boost to consumer spending in the near term and a broad-based positive impact,” it said.
On the local bourse, trading in the morning session today ended positively with consumer counters dominating the top gains list.
Nestle rose RM1.40 to RM142.90, British American Tobacco increased RM1.26 to RM32.82, Ajinomoto improved RM1.00 to RM23.80 and Panasonic Manufacturing Malaysia was 42 sen better at RM37.70.
On the automotive sector, the research firm said new/recon car prices should be six per cent cheaper effective June 1, assuming that the sales tax, which stood at 10 per cent prior to the GST, would not return.
“We are positive over this new development as it should help boost the total industry volume sales beginning the second half this year, to catch up with our 2018 forecast of 595,000 units (+three per cent year-on-year).
“However, sales in May could fall drastically as consumers hold back on purchases,” the research firm said. — Bernama