FMM Press Release on Comments On Government Announcement on The Postponement of GST

Further to the announcement from the Ministry of Finance today, FMM is pleased to note that the Government has taken cognisance of the views of the private sector to the Tax Review Panel to defer the implementation of the GST. This is an example of Malaysia Inc in action where the many concerns raised by the private sector have received the attention of the policy makers.

In our feedback to the Government, FMM has submitted our concerns on the costs of doing business for the manufacturers especially the SMEs.

The implementation of GST will have an eroding impact on the competitiveness of our local industries with particular emphasis on exporters. The effect of GST on input costs at multi-stages, as opposed to the current single stage Sales and Service Tax (SST), would raise the cost of funding the inputs. During this time of acute global competition and high energy prices, any rise in costs can affect our industries’ competitiveness and dampen the demand for our exports.

FMM is of the opinion that additional time is required to conduct a comprehensive study on the appropriate consumption tax model. Our own research has shown that an average of 2-4 years may be required for discussion and deliberation before a decision can be made. In the course of further research and study, the continued effectiveness of the SST as a consumption tax should not be discounted in preference over the GST.

Finally, FMM is appreciative of the Government’s response which has allayed the concerns of the private sector. We look forward to participate in further discussions with the Government on this issue.