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Tax, transport and juice: Triple blow could spike imported fruit prices, traders warn
KUALA LUMPUR: Consumers may soon be paying significantly more for imported fruits following a series of cost increases from July 1, traders say.
Kuala Lumpur Fruits Wholesalers Association president Chin Nyuk Moy said importers were bracing to get hit on three fronts: a 5% sales and service tax (SST) on imported fruits, a 30% increase in freight charges at Port Klang, and higher electricity tariffs in Peninsular Malaysia.
"Port Klang will implement increased container handling and storage fees.
"Along with the SST and rising base electricity tariffs in Peninsular Malaysia on July 1, these changes are set to escalate operating expenses," she told a press conference on Monday (June 23).
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Chin added that many imported fruits are also subject to import duties of between 5% and 30%, depending on their origin and type.
'Fruits from countries such as Thailand, South Africa and the United States still incur import taxes. With everything added up, we can't imagine how much apples, oranges, pears and grapes will cost after July 1,' she said.
Electricity costs are a major concern for cold storage operators, with Chin citing her own facility's monthly bill of around RM60,000.
'That's a significant burden. SST also applies to transport and electricity,' she said.
Fruit sales typically peak on the 1st and 15th of the lunar calendar months, but she warned that rising costs could dampen demand.
'We're under immense pressure. Fruits aren't luxury items, they're daily necessities. Vegetables are exempt from SST, and we believe fruits should be too. You can't replace apples with cucumbers,' she said.
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Chin pointed out that fruits such as avocados, once considered premium, are now commonplace in supermarkets.
'Fruits are vital for people of all ages. They promote good health. It's unjust to treat them as luxury goods,' she said.
She also expressed uncertainty over how consumers will respond from July.
"If people begin cutting back, we will be forced to reduce imports. Our profit margins are already razor-thin, and we still have to cover labour and operating costs," she said.
Chin said importers try to source from more affordable countries, but even then, supply is shrinking with Australia producing less, the United States reducing imports, and exchange rates against importers.
'Chinese apples have also gone up. A box that used to cost RM50 or RM60 now costs RM100. For oranges, we've turned to Egypt and the Middle East for better value,' she added.
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Northern Kuala Lumpur Traders Association president Ong Mok Hooi said small and medium-sized enterprises (SMEs) are already under pressure and cannot shoulder more costs.
'SMEs are the backbone of the economy. Expanding the SST to cover imported fruits at a time of economic uncertainty only adds to our burdens.
"If business keeps declining, why are we hiring so many workers?
'If the government truly wants to support SMEs, it should focus on that, not waste money on white elephant projects,' Ong said.
Wholesaler Khiew Yoon Chin said consumers used to be able to buy 3kg of fruit for RM10, but after last year's diesel hike, that now only gets them 2kg – and with the expansion of the SST, it may soon be even less.
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He noted that fruits were not taxed under the previous goods and services tax (GST) regime but now are, under the expanded SST.
'Businesses are already grappling with income tax, PERKESO contributions, rising transport costs and new e-invoicing rules.
"The government should consider the needs of the people. Fruits are rich in vitamins and essential for health – even GST didn't tax them,' he said.
Under the expanded SST, a 5% tax will be imposed on all imported fruits, while locally grown produce will remain exempt. For example, strawberries from Cameron Highlands will remain tax-free, but imported varieties will be subject to SST.
