Mom-and-pop shop owners in Malaysia eagerly await zero-rated GST

Mr Lee Peng Soon waving to reporters at his shop in Petaling Jaya. At Kedai Peng Soon, the father-and-son team is scratching their heads on how to update the prices of 1,000 products in their small grocery store.
Mr Lee Peng Soon waving to reporters at his shop in Petaling Jaya. At Kedai Peng Soon, the father-and-son team is scratching their heads on how to update the prices of 1,000 products in their small grocery store.PHOTO: THE STAR/ ASIA NEWS NETWORK

PETALING JAYA (THE STAR/ASIA NEWS NETWORK) - It is about two weeks away but small businesses are eagerly awaiting June 1 when the Goods and Services Tax (GST) will be zero-rated. They are keeping their fingers crossed that their businesses will pick up again.

Malaysia's Finance Ministry, which made the announcement on Wednesday (May 16), has apparently not sent out official notices to businesses, many of whom are unsure how to update their operations.

 

At Kedai Peng Soon grocery store, the father-and-son team is scratching their heads on how to update the prices of 1,000 products in their small shop.

"I feel very good about GST being at zero per cent but now we don't know where to start," Lee Peng Soon, 78, said.

"We have paid GST for our existing stock but we're uncertain whether we can claim our money back from our supplier because we won't be able to sell the products at the GST-inclusive prices."

A workshop manager claimed that business slowed down following the introduction of GST.

"Our customers reduced by at least 30 per cent after GST was imposed in April 2015," said Goh Li May, manager at Eastern Goh Auto Works Sdn Bhd.

 

"The suppliers charge us GST so we have no choice but to transfer the cost to our customers."

To retain their customers, other traders decided to absorb the tax, a move that greatly reduced their profit margins.

"After the implementation of GST, business had become very, very slow," said Wan Esha Wan Long, who runs Esha Batik Collection.

"Customers used to buy up to four items, but they had become careful with spending and only buy one item," the 53-year-old added.

Raja Kumar Ammathalli, manager of Aunty Manju's Banana Leaf, said it had been difficult to explain to diners about the price increase in the menu as the cost of raw materials had gone up as well.

While most traders feel the pinch of the 6 per cent tax, restaurant owner Ng Chun Keat felt that it was a small price to pay for the development of the country.

"What matters is how the government uses the tax revenue to develop the country," he said, adding that he would not mind the tax if it boosted the economy.

Ng is pessimistic suppliers will reduce their prices after June 1.

"It's impossible. Prices only go up. They never go down," he said.