Emphasising a point: (from left) FMM vice-president Datuk Nathan K. Suppiah, Soh and vice-president Jacob Lee Chor Kok at the briefing.
FMM In The News: THE STAR, KUALA LUMPUR, March 11, 2024 - The Federation of Malaysian Manufacturers (FMM) expects better business conditions in the first half of 2024 (1H24) but rising costs, especially from taxes and falling ringgit value, remain a major concern.
FMM president Tan Sri Soh Thian Lai is urging the government to revise and look into various considerations to enhance the business environment.
Soh has called for an extension of the deadline for employers in the formal sector to bring in foreign workers, pushing it back from the current May 31 to Sept 30.
He explained that the entire process of hiring foreign workers, from sourcing to bringing them into the country, takes at least four months.
Soh emphasised this extension is necessary, especially within the electrical and electronics sector, to prevent a shortage of workforce from limiting economic growth.
“We don’t want a shortage of workforce to limit our economic growth,” he said, while stressing the importance of achieving maximum output and higher productivity.
When industry growth and policies differ, Soh said investors might lose confidence, emphasising the importance of advocating for credit, consistency and certainty.
“The key is having the right policies, the right environment and the right decisions by the government. Let’s not confuse the industry,” he added.
Additionally, Soh raised concerns on the service tax increase for logistics, which is said to be causing a cascading tax situation.
Prior to the 2% increase, he said the cost incurred for the service tax was 7%, but it has now risen to 12%.
Through a survey conducted with over 600 manufacturers, Soh said that approximately 80% of respondents expect to pass on the new tax increase to their products.
Soh suggested that instead of introducing new tax schemes such as low-value goods tax (LVGT), high-value goods tax (HVGT), capital gains tax (CGT) and an increase in service tax, the government should stick to a single tax system, proposing the reintroduction of the goods and services tax (GST).
He highlighted that the government is looking to collect about RM35bil from the sales and service tax and an additional RM10bil from other taxes, including LVGT, HVGT and CGT, totalling around RM45bil.
However, he pointed out the implementation of the GST in 2017 managed to collect about RM55bil.
“This (the GST) is simpler, fairer and transparent. It is also easier to manage. Of course, there will be an impact on the rakyat. Having a single tax for the long term is beneficial for the country to move forward economically,” he noted.
Soh also proposed the government establish a fund to offer financial assistance to small and medium enterprises (SMEs) for complying with global environmental, social and governance (ESG) standards, recommending an initial size of RM2bil.
With ESG compliance regulations being established globally and SMEs contributing between 10% and 20% to exports, totalling in billions, he said non-compliance could deprive them of export opportunities.