Shoppers in Malaysia rush to stock up before SST

Long queues formed at Tesco Shah Alam in Selangor on Thursday as Malaysians did some last-minute shopping before the SST. Despite items such as eggs being exempt, some shoppers are stocking up anyway.
Long queues formed at Tesco Shah Alam in Selangor on Thursday as Malaysians did some last-minute shopping before the SST. Despite items such as eggs being exempt, some shoppers are stocking up anyway.ST PHOTO: NADIRAH H. RODZI

Last-minute shoppers hoping to catch final bargains or stock up before Malaysia's sales and services tax (SST) kicks in today were left disappointed when stores ran out of goods and even trolleys.

Ms Noraini Ahmad, who was at a shopping mall in Selangor yesterday, said she took two days off from work as she was worried the SST would result in price hikes.

"I spent one day surveying prices and the second day to do all the shopping. But I had a hard time getting some items as they were out of stock," said the 39-year-old clerk.

Consumers have been enjoying a tax holiday since June 1, when the new Pakatan Harapan government effectively scrapped the 6 per cent goods and services tax (GST). That holiday ends today, with the reintroduction of the SST - a sales tax of 5 per cent and 10 per cent on goods, and a 6 per cent tax on services.

Retiree Tan Bee Hong is renovating her house in Petaling Jaya and was hoping to shave up to RM500 (S$167) off her bill for big-ticket household items, which are now subject to a 10 per cent sales tax.

"I am looking for a new television and air-conditioner. If there is no stock, I guess I will buy when it is on promotion. I will not make a purchase at retail price," the 61-year-old said. "GST or SST, the most important thing is being a smart consumer," she added.

The government has touted the SST as being less burdensome on consumers compared to the GST, which was introduced in 2015 under the Barisan Nasional administration and blamed for raising living costs.

SST revenue is expected to contribute RM21 billion a year to government coffers, less than half the RM44 billion collected in GST revenue last year.

"So, this means we have returned RM23 billion to the people," Finance Minister Lim Guan Eng said at a media briefing on Thursday.

Also, unlike the GST, the SST is a single-stage tax collected only once, and applies to a narrower set of goods and services.

The minister said the new tax regime should not lead to higher prices, and estimated that headline inflation will ease to 2 per cent this year, compared with 3.7 per cent last year. "If there is an increase (in prices), it would likely be due to profiteering by businesses," he said.

 

Retailers saw sales surge in the past month, which explains the dwindling stocks this week. Salesman Hasan Al Hawari, 35, said the store he works for recorded a 100 per cent jump in profit last month, compared with previous months.

"There was a sudden surge in demand for televisions, water heaters, refrigerators and other electrical goods, especially in the last week of August. Most of our customers said it was a good time to buy to avoid paying more when SST kicks in," he said.

"So far, a leading electrical company has announced to us that there will be a tax of 5 per cent to 10 per cent on its goods. We also heard some companies are looking at the possibility of absorbing the tax without increasing the price," he said.

Despite most basic necessities such as eggs, chicken and rice being exempt from SST, shoppers in the long queues at Tesco Shah Alam's checkout counters on Thursday were not taking any chances.

Shelves displaying eggs were practically emptied out, while one woman who declined to give her name had 20 whole fresh chickens in her trolley. "I am scared the price will go up," she said.


SALES AND SERVICES TAX AT A GLANCE

Sales tax

The sales tax rate is 5 per cent or 10 per cent, and is charged on taxable goods manufactured by a taxable person - a person or company with an annual turnover exceeding RM500,000 (S$166,600) - and taxable goods imported into Malaysia. The government collects the tax from the manufacturer or importer. Here are some examples of items exempt from as well as those attracting sales tax.

EXEMPT FROM SALES TAX

• Fresh food such as meat, eggs, vegetables, fruits

• Other food items like rice, coffee, tea, milk powder, sugar, palm and coconut cooking oil

• Medicines and pharmaceutical products

• Diapers for children and adults

• Motorcycles below 200cc

• Petrol and diesel

• Most items made in or imported into duty-free islands of Langkawi, Labuan and Tioman

SALES TAX OF 5 PER CENT

• Food items like olive, sunflower and groundnut cooking oil, butter and three-in-one coffee

• Mobile phones, cordless phones

• Laptops

SALES TAX OF 10 PER CENT

• Shellfish

• Canned drinks

• Household items and electrical appliances

• Plastic items like lunchboxes and clothes hangers

• Toilet paper and tissue

• Cars

• Motorcycles exceeding 200cc

• Cosmetics and toiletries

Service tax

The service tax is a 6 per cent charge levied on any provision of taxable services by businesses with an annual revenue exceeding RM500,000 a year. Taxable services include those provided by hotels, insurance firms, gaming outfits, telcos and professionals like lawyers and accountants. Food and beverage outlets have to pay service tax only if they have an annual revenue of over RM1.5 million.

There is also a separate annual service tax of RM25 per credit card, to be paid by card users.

SOURCE: ROYAL MALAYSIAN CUSTOMS DEPARTMENT

    A version of this article appeared in the print edition of The Straits Times on September 01, 2018, with the headline 'Shoppers in Malaysia rush to stock up before SST'. Print Edition | Subscribe