Greater clarity on SST needed for consumers
> RGM wants govt to release guidelines to ensure public continue spending post tax holiday
KUALA LUMPUR: The government needs to provide more details on the implementation of the Sales and Services Tax (SST) and inform the private sector (an indication) on its action with SST, to ensure that consumers continue to spend post the tax holiday, according to retail consulting firm Retail Group Malaysia (RGM).
The government announced on Monday that the Sales and Services Tax (SST) rate will be reintroduced on Sept 1 at 10% for sales and 6% for services. No further details were given.
RGM managing director Tan Hai Hsin said the government needs to release more concrete guidelines and information to educate consumers; while private sector operators and trade associations need to communicate their intention to consumers, if they are hiking prices.
“We need more information, what kind of coverage, so we know how it will impact the market and whether retailers will increase their prices? Are we having SST on essential items? Trade associations should also get consensus from members and tell whether prices are going to increase or not, and why. A price increase or reduction does not matter, just say it clearly.
“The public needs that information to decide on what to do or people will stop buying for the next two months. That’s what we’re worried about and it will affect the retail industry and the economy,” he said at a press briefing on the retail outlook of the second half of 2018 yesterday.
He said the government is currently still doing lots of fire-fighting and has not come up with new policies on improving the economy.
Tan pointed out that a change in ruling party has direct impact on consumers’ confidence level and consumers’ propensity to spend.
He explained that consumers still have the same amount of money but is shifting the way they spend, with more being spent on services and dining out compared to fashion and groceries, in line with global trends.
Despite all the doom and gloom, Tan said there is always opportunities, citing that food & beverage and fashion retail are still growing amid some closures. Up to June this year, he noted the entry of 25 foreign brands in Malaysia while last year saw the entry of 71 foreign brands into the country.
He said it will not be difficult for retailers to change to the SST system and noted that this round will be easier compared to the time when GST was implemented. The investment for the change to the SST system will be low compared to GST, while SST is also something that retailers have experienced before.
RGM yesterday maintained its projected sales growth rate for the local retail industry in 2018 at 5.3% following the SST announcement. It had revised upwards the projection to 5.3% in June from 4.7% estimated in March.
On the retail outlook for 2019, Tan said new economic policies to support economic growth are needed in the next few months. The benefits of these policies must be made known to and understood by the public and this will support consumer spending in 2019.
“Consumers remain cautious on retail spending. At the same time, they are always looking for value-for-money goods and services, which is not defined by the prices of the goods and services.”