Latest news with #HARRYBEATTY
Malaysian Reserve
3 days ago
- Business
- Malaysian Reserve
Exclusion of imported food from SST won't affect RM10b target
by GLORIA HARRY BEATTY THE recent exclusion of selected imported food items from the expanded Sales and Service Tax (SST) is not expected to impact the government's RM10 billion tax revenue target, said Finance Minister II Datuk Seri Amir Hamzah Azizan (picture). The government recently revised the SST expansion to exclude some imported foods such as apples, oranges and dates. Amir noted that the government made certain adjustments based on public feedback. 'These are things that are probably now part and parcel of the norm in society,' he said during his fireside chat 'Malaysia: Macro Resilience, Fiscal Consolidation' at the Invest ASEAN-Malaysia Conference 2025 today. Despite ongoing fiscal adjustments, the government remains confident in meeting its collection targets. 'We are confident because the economy is still puttering along…I do know my team is always very conservative in the estimate,' he added. On a different note, Amir Hamzah pointed out that the government has increased the service tax registration threshold for leasing, rental and financial services from RM500,000 to RM1 million, which was to ensure that small and medium enterprises in Malaysia are not affected. 'It goes back to the philosophy of much more progressive, targeted approaches as opposed to blanket mechanisms. When we decided to do the revision, we also looked at what was going to be the impact on financials,' he said. On June 27, the government announced a revision to the SST framework, following extensive feedback from the public and engagement with industry stakeholders on the proposed expansion. Imported mandarin oranges and dates are exempted from the SST, while essential goods such as rice and local fish will remain tax-free. The government has also exempted the proposed service tax on beauty and personal grooming services such as manicures, pedicures, facials, barber services and hairdressing.
Malaysian Reserve
22-04-2025
- Business
- Malaysian Reserve
US tariffs signal broader protectionist shift, spur rethink of Malaysia's trade strategy
Heavy dependence on one or two key markets leaves Malaysia vulnerable to abrupt policy changes, economic shocks or geopolitical shifts by GLORIA HARRY BEATTY THE US' abrupt imposition of a 24% tariff on selected Malaysian goods — though now temporarily paused — has rattled policymakers and businesses, with economists warning of long-term implications for global trade and Malaysia's economic positioning. While US President Donald Trump's administration has announced a 90-day deferment on the most punitive 'reciprocal tariffs', the 10% flat tariff remains in place, offering a narrow window for negotiations. For Malaysia, it is both a reprieve and a wake-up call. Institute for Democracy and Economic Affairs Malaysia economist Doris Liew said it underscores the urgency for Malaysia to diversify its trade and export partnerships, not just to reduce its reliance on the US but also to rebalance its exposure to any single trading partner, including China. 'Heavy dependence on one or two key markets leaves the country vulnerable to abrupt policy changes, economic shocks or geopolitical shifts,' she said to The Malaysian Reserve (TMR). Meanwhile, Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid expected American consumers would likely feel the sting. 'Since prices are likely to go up, consumers in the US might hold back on their spending. Already, the consumer confidence has been on a decline, reflecting uncertainties where the households would need to contend with higher import tariffs. 'Some of them might absorb, partially absorb or completely pass on the additional cost to the final consumers in the US,' he noted. He added that rising operational costs could also hit US companies' competitiveness. 'It remains to be seen whether US companies operating abroad (will relocate) to the US to avoid tariffs. There are issues of scale, talent and supply chain readiness,' he said. Heavy dependence on one or two key markets leaves the country vulnerable to abrupt policy changes, Liew says Premature Escalation On the other hand, Kuala Lumpur-based consulting firm Centre for Market Education CEO Dr Carmelo Ferlito described the situation as one of premature escalation. 'Tariffs have been imposed but paused, most businesses will stay in a wait-and-see mode,' he said, adding that history shows protectionism rarely ends well. 'Ultimately, the result of protectionism is just a smaller market for everybody. So, everybody is going to lose — particularly consumers,' he said. Ferlito called for Malaysia to pursue more genuine free trade agreements (FTAs), saying a true FTA is made of two lines: 'You can sell to me with zero tariffs, I can sell to you with zero tariffs. The rest is just politics.' Furthermore, the tariff saga is widely viewed as a front in the ongoing US-China trade rivalry, but with ripple effects across Southeast Asia. 'My sense is that many countries will search for friendly trading partners. This could mean renewed interest in frameworks like the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP). Even the stalled Malaysia-European Union FTA (MEUFTA) is now moving forward,' Mohd Afzanizam said. Ferlito said the real trade war remains between the US and China, with the former trying to force Southeast Asian nations to choose their alliances. However, he believes that China will avoid direct retaliation against ASEAN where it will mainly act against the US and try to reinforce ties with Asean economies. Malaysia's Next Move Economists agree that Malaysia's current neutral stance is likely the most pragmatic option. Mohd Afzanizam noted that it is very delicate and the choice is not binary. 'Malaysia must continue on a double-track path, staying diplomatic with both while also seeking out new partners,' he said. He added that more FTAs and multilateral trade deals are key. 'Negotiations are the right thing to do. Tit-for-tat measures would only raise the cost of doing business for everyone,' he said. Liew echoed the importance of collective action, saying leveraging ASEAN as a collective voice is strategically crucial. She said regional coordination, whether through ASEAN or ASEAN+ dialogues, can greatly enhance bargaining power. As tensions escalate, the focus now shifts to economic resilience and long-term hedging strategies. Ferlito said Malaysia should explore at 360 degrees all options, starting from the EU. 'Certain changes don't happen overnight, but that's where we need to head,' he added. Liew warned that in an increasingly multipolar and fragmented trade landscape, smaller economies cannot afford complacency. She said Malaysia's best course of action is to remain agile, strengthen its domestic economic fundamentals and deepen its trade ties far beyond its traditional partners. This article first appeared in The Malaysian Reserve weekly print edition
