More calls to postpone SST expansion amid economic struggles

Borneo Post

13-06-2025

David Chan
KOTA KINABALU (June 13): The federal government's intention to expand the Sales and Services Tax (SST) on July 1 has received more negative reactions in Sabah with more calls for its postponement.
The National Consumer Foundation Malaysia (Sabah Chapter) expresses deep concern as it will inevitably worsen the cost of living for ordinary Malaysians.
'We are witnessing a continuous rise in daily expenses – from basic food items to essential services – and any increase in SST will directly impact business operating costs. These costs will be passed on to consumers, compounding financial hardship at a time when wages remain stagnant and employment insecurity is rising,' said its chairman, David Chan.
He said the recent announcement by Petronas to cut 5,000 jobs is a significant signal of economic strain. As global markets are rattled by a prolonged trade war and rising import tariffs – particularly from the United States – Malaysia is not spared. The ripple effects are already being felt across multiple sectors, from manufacturing to logistics.
'At a time when the rakyat are already grappling with inflation and reduced purchasing power, we urge the Federal Government to defer any expansion of SST until the economy stabilises and international trade tensions ease.
'Instead, the focus should be on revitalising the domestic economy, protecting jobs, and ensuring affordable access to goods and services. Any tax adjustment should only be implemented with clear impact studies and mitigation plans to protect the low- and middle-income groups,' he said.
'Let us not burden the rakyat further in the name of fiscal reform. Economic recovery must be people-centred, and taxation policy must reflect the current realities faced by consumers and businesses alike,' Chan added.
Junz Wong
Warisan Vice President Datuk Junz Wong has strongly recommended the federal government to reconsider the decision, reminding that the move will impose unnecessary hardship on businesses and consumers, especially in Sabah.
In a statement today, Wong questioned the rationale behind implementing such a far-reaching policy with less than three weeks' notice, calling it 'abrupt and confusing.'
'The government must explain why this drastic SST expansion is being rushed through. What is the urgency? Why weren't businesses given more time to adapt? Many don't even know what is taxed at 5%, 10%, or exempted,' said Wong.
'And we all know what happens next as ruthless and clueless merchants will simply apply the highest tax rate across their product range, passing the burden to consumers and families.'
He stressed that Sabahans do not support the expansion of the SST regime and called for it to be reviewed immediately.
Wong also questioned the fiscal position of Madani government.
'Is our government so cash-strapped that it now needs to extract more money from the people and SMEs?' he asked.
'Malaysians are suffering for years of Covid post effects, yet now rakyat and businesses must now carry the burden.'
Wong further warned that Malaysia risks losing its business-friendly reputation in the region.
'This SST regime, combined with already burdensome regulations and tax compliance, is making Malaysia an expensive country to do business in,' he said.
'How do we expect to remain competitive in ASEAN when others are streamlining their systems and lowering costs while we keep adding more layers of taxation and red tape?'
He warned that the expansion of SST may discourage foreign direct investments (FDIs) and even lead existing ones to exit Malaysia.
'Investors will think twice. Why stay in Malaysia when doing business here gets costlier and more complicated every year?' he asked.
'With the exit of FDIs, our economy will shrink, unemployment will rise, and inflation will worsen because we'll be forced to import more goods that could have been manufactured locally.'
'What happens to our palm oil, our coffee, our cocoa and other agricultural plantations? Instead of developing downstream industries, we'll go back to exporting raw materials and importing expensive finished goods.'
Wong asked the federal government to lay out a long-term economic strategy.
'Madani government must show that they have real vision for Malaysia's future and not just obsessed with taxing businesses and people to fill the coffers?'
Wong further questioned the silence of the Sabah GRS-PH government, accusing them of being too busy with issues like political survival, mining and logging to stand up for Sabahans.
'Sabahans are struggling. Small businesses are struggling. But does the GRS-led Sabah government care about Sabahans?
'Enough is enough. The rakyat should not be punished further by policies that are ill-timed, ill-planned.
'You cannot grow the economy by keep taxing it.'