ACCCIM urges delay of expanded SST to 2026, lower initial rate
The government was urged to postpone the implementation of the expanded sales and service tax (SST) from July 1, 2025, to January 2026.
The Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) said this is to allow more time for preparation, as several areas still require clarification.
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Strengthen logistics sector, govt urged
KUALA LUMPUR: The logistics sector is sounding the alarm over escalating operating costs fuelled by economic uncertainties and geopolitical tensions. Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) president Datuk Ng Yih Pyng said it is crucial for the 13th Malaysia Plan and federal budget to prioritise strengthening logistics infrastructure to sustain the sector's competitiveness. 'The ACCCIM Logistics and Transport Committee has been engaging with members to address key issues such as rising operational costs, inspection backlogs and customs clearance efficiency. 'Rising operating costs, driven by increased minimum wage, fuel expenses and upcoming tax implementations on rental or leasing services, pose a significant challenge to our logistics sector. 'The phased 30% tariff hike at Port Klang beginning July 1 is also a pressing issue that could strain industry players,' he said at the ACCCIM Power Chat 6.0 here yesterday. Also present were Transport Minister Anthony Loke, who was the guest of honour, industry players and ACCCIM constituent members. Ng noted that logistics players are also bracing for the indirect effects of US tariffs and the Israel-Iran conflict, which could disrupt supply chains, shipping routes and freight charges. 'Malaysia's total trade reached a record RM2.89 trillion last year, with the freight sector projected to grow by 5.2% annually until 2030. 'The numbers are clear. We must ensure our infrastructure and logistics services are both efficient and adaptable to evolving demands,' he said. Another issue, said Ng, is the backlog of commercial vehicle inspections affecting the implementation of the Industry Code of Practice (ICOP) for transport safety. 'While ICOP aims to enhance safety standards, inspection delays could hinder its effective enforcement. 'Improving customs clearance is urgent as efficient processing is critical for smooth international trade. 'Malaysia's port dwell times are longer than those in Singapore, Indonesia and Vietnam, according to the World Bank's Logistics Performance Index 2023. 'We urge the establishment of a Single Integrated Window to streamline trade and customs operations through digital technology,' he added. On the upcoming 13th Malaysia Plan and federal budget, Ng stressed the importance of focusing on critical areas, particularly the enhancement of logistics and transport infrastructure. 'Strengthening infrastructure, including port upgrades and improving road and rail connectivity, along with developing cold-chain facilities in underserved regions, is vital for ensuring seamless domestic and cross-border supply chains,' he said. He called on the government to establish a transparent and consistent regulatory environment, highlighting that 'clear regulations and uniform application of logistics policies are necessary to reduce uncertainty for industry players navigating compliance and investment decisions'. 'Accelerating digitalisation and promoting green technologies in logistics are crucial. 'Providing grants and incentives will help small and medium enterprises transition to efficient, sustainable operations, especially in high-stakes pharmaceuticals and food safety sectors,' he said. Ng highlighted regional disparities, particularly in Sabah and Sarawak, where inadequate cold-chain infrastructure and inconsistent policy enforcement hinder logistics investment in the region. 'Strategic investment in East Malaysia is not just vital but overdue. Enhancing logistics there will unlock vast economic potential and support regional inclusivity,' he said. Ng also called for enhanced human capital development and road safety. 'A future-ready workforce equipped with digital and technological skills is essential for sustaining Malaysia's logistics competitiveness,' he said, adding that a comprehensive approach to road safety is needed, including road design improvements, safety engineering, public education and strict enforcement. Additionally, Ng highlighted the foundational principles of '4C - Communication, Clarity, Consistency and Collaboration' as essential for fostering effective partnerships between the government and stakeholders. He also commended the Transport Ministry for initiatives like the National Transport Policy and the development of smart port infrastructure. 'Effective execution of these initiatives is crucial for economic impact,' said Ng.
The Star
2 hours ago
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Call to review SST for SMEs
PETALING JAYA: The revision of the Sales and Services Tax (SST) thresholds for rental and leasing services represents a step forward, but industry experts argue that without accompanying structural reforms, Malaysian small businesses will continue to struggle in the challenging economic climate. SME Association of Malaysia president Dr Chin Chee Seong said that more should be done to address challenges faced by small businesses. ALSO READ: Traders brace for cost hikes, weaker spending 'The current revision to the SST threshold, while helpful to a small segment, does not fully address the systemic pressures MSMEs face,' he said. Chin pointed out that among the additional support to small businesses are tax policy recalibration, reintroduction of input tax credit or tax offset mechanism and stronger digitalisation and compliance support. He explained that recalibrating tax policy based on tenant size would shield MSMEs from burdensome tax costs, particularly in high-rent urban areas. 'The vast majority of landlords in urban centres including commercial building owners, mall operators and property investment companies easily exceed the RM1mil threshold. 'As such, most MSMEs renting from these landlords will still be charged the 8% service tax, resulting in an unavoidable increase in their operational costs,' he said, suggesting the threshold should be set at RM2mil or higher. On Friday, the Finance Ministry announced revisions on the expanded SST which is due to begin on July 1. Among others, the annual sales threshold for mandatory Service Tax registration has been raised from RM500,000 to RM1mil for leasing, rental, and financial services. Chin also urged the government to consider the reinstatement of a more structured tax framework, citing Goods and Services Tax (GST), or a hybrid model that could reduce double taxation. 'Many MSMEs lack digital tools or accounting systems to manage SST compliance and the incoming e-invoicing mandate. 'Expand access to subsidised point-of-sales systems, accounting software, and e-invoicing tools under programmes like MSME Digital Grant or Penjana,' he said when explaining about the need for digital transformation for MSMEs. 'If the government is serious about enabling MSMEs, the backbone of Malaysia's economy, to remain competitive and resilient, it must go beyond symbolic tax threshold adjustments. 'What is required is structural reform, practical support, and policy empathy that takes into account the fragile business environment, rising operating costs, and the need for long-term sustainability,' added Chin. Federation of Malaysian Business Associations vice-chairman Nivas Ragavan agreed with the need for a higher threshold. While the RM1mil threshold was positive and meaningful for MSMEs, he cited factors such as high operational costs in the urban areas. As such, he said there should be a further increase to RM1.5mil or introduce a tiered threshold according to sectors. This was to provide more room for MSMEs to scale before being burdened with tax obligations, he said. Nevertheless, Nivas agreed that the revision would allow the sector to keep prices more affordable for consumers. 'It would also allow MSMEs to retain margins or reinvest in business development and reduce administrative distractions so they can focus on their core business,' he said. As part of further support to small businesses, Nivas suggested that there should be a simplified taxation system for MSMEs, like introducing presumptive tax systems.
The Star
2 hours ago
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Traders brace for cost hikes, weaker spending
JOHOR BARU: The expanded Sales and Services Tax (SST), which comes into effect on July 1, will likely impact local traders and consumers including those coming from Singapore, say Johor business groups. Johor Indian Petty Traders and Small Business Association chairman D. Ravindran said many of their 400-odd members have already voiced their concerns over the SST expansion. ALSO READ: Call to review SST for SMEs 'We are already struggling with high costs, so the timing (of the expanded tax) has come at the wrong time. 'Many of us are already paying high rental fees especially those who are operating within the Johor Baru area,' he said when contacted. Ravindran said that the SST expansion would lead to lower spending power of Malaysian consumers. Although Singaporeans prefer to cross the Causeway and Second Link to shop and eat in Johor, he said that 'as a local business, we cannot just depend solely on Singaporean customers or those earning Singapore dollars'. 'We need support from Malaysian consumers, too,' he said. The Finance Ministry had announced that the reviewed and expanded SST, as stated in Budget 2025, would take effect on July 1. The measure aims to strengthen the country's fiscal position by increasing revenue and broadening the tax base. South Johor SME Association adviser Teh Kee Sin said that the SST expansion would lead to a significant impact on Johor Baru's economy, especially for those involved in retail, food and beverage and services. 'Surely the SST revision will increase the prices of raw materials. This would add on to the selling price,' he said. He said that consumers, even those earning Singapore dollars, are sensitive to price increases. Johor Baru Bazaar Karat Development and Welfare Association president Fuad Rahmat said the expected increase in SST rate would undoubtedly have an impact on the ecosystem of small traders, such as those operating at the Bazar Karat here. 'The purchasing power of local visitors as well as those from Singapore has been declining in recent times. 'With SST, prices may go up. The customer may not know that part of the cost is due to tax,' he said. Furthermore, he said that suppliers or distributors could raise prices arbitrarily on the pretext of taxation. Fuad said he was concerned that small traders like them do not have the bargaining power that large companies do. 'When suppliers raise their prices, we have little choice but to absorb the higher costs or pass them on to our customers. 'This, in turn, will make visitors more cautious about spending,' he said. He urged the Domestic Trade and Cost of Living Ministry to tighten enforcement against suppliers who take advantage on the situation by raising prices without justification. Fuad also said that the focus should not be solely on traders, but also on the supply chain, which could be the real source of these price hikes. 'As a community of micro and informal traders, I hope the government will consider providing special assistance, exemptions, or targeted subsidies, for this group, so we can continue to survive and contribute to the local economy, while helping to draw more visitors to commercial centres like Bazar Karat JB,' he said.
