More buying power for consumers post-GST

KUALA LUMPUR: The zerorated Goods and Services Tax ( GST), effective Friday, is something the public and even traders nationwide are looking forward to as it is set to increase the buying power of consumers.

However, to what extent the zero per cent GST will benefit consumers, as well as its impact on the business community, remains to be seen.

Associate Prof Dr Nurhaizal Azam Arif, a lecturer in International Business and Multinational Enterprise at Hiroshima City University in Japan, expects an increase in the purchasing power of consumers in the short term before the Sales and Services Tax kicks in.

“The prices of goods, including cars, will most likely drop. For example, Proton and Volkswagen have already adhered to the zerorated GST – this is something that’s bound to attract the attention of car buyers,” he told Bernama.

Large- scale industries, like car manufacturers, were among the sectors that would benefit from the zero- rated GST, he said, adding that eventually after the introduction of SST, the purchasing power of consumers would be determined by the structure of the tax.

The abolition of the GST, which was introduced in Malaysia on April 1, 2015 at a standard rate of six per cent, was among the pledges made by Pakatan Nasional during the 14th General Election.

On May 16, the Finance Ministry announced that the GST will be set at zero per cent beginning June 1.

Finance Minister Lim Guan Eng had said that the SST would be reintroduced later and set at 10 per cent as stated in the Pakatan Harapan election manifesto.

The prices of goods and services over the longer term post- GST, however, would be influenced by several factors, including foreign exchange rates and changes in production costs, said Nurhaizal Azam.

He urged the government to come up with an effective mechanism to ensure that the prices of goods and services, particularly prices involving food, transport, education and housing, remain under control.

On how the zero per cent GST would affect traders, he said the impact would be minimal.

“In fact, it ( zero- rated GST) is expected to be better for them because they can do away with the costs related to GST management.

“They may later face some temporary issues when they shift to SST,” he added.

Prof Dr Mohamad Hanapi Mohamad, a member of the board of directors of Picoms International University College, here, said in order for the prices of goods and services to drop after the zero- rated GST took effect, enforcement officers should conduct checks on not only retailers but also manufacturers, wholesalers and distributors to ensure that their GST decoding system was in line with the June 1 date set by the new government.

Mohamad Hanapi, who was formerly a lecturer in international business management at Universiti Utara Malaysia, said to sustain the postGST price drop, fuel prices have to be maintained at the current levels as production costs were inf luenced by the fuel price situation. — Bernama