Business groups feeling the pinch

The Star

20-07-2025

Red ink rising: Fuad (left) and Ravindran say many of their members are noting a drop in sales, especially in the last few weeks.
JOHOR BARU: Public concerns over the possible impact of the looming United States tariff and the recent expansion of the Sales and Service Tax (SST) are beginning to show tangible effects, according to business groups here.
Johor Baru Bazaar Karat Development and Welfare Asso­ciation president Fuad Rahmat said many of its members have noticed a drop in sales, especially in the last few weeks.
'While none of our members have gone as far as shutting down for good or scaling down their businesses, they are definitely affected.
'Business has not been good for a lot of traders, with some even saying that sales were worse than during the Covid-19 pandemic.
'While the expanded SST does not directly affect Bazaar Karat traders, it may contribute to lower sales as people are afraid to spend too much due to the uncertain impacts of the tax expansion and the coming US tariff,' he said.
He added that business groups such as his would need to be crea­tive to assist their members in offsetting the impact of the SST.
'We need to be proactive and come up with ideas to help attract more people to the bazaar.
'One of the initiatives we have taken up is giving customers coupons that they can use when shopping at the bazaar.
'We are also planning to come up with some events that may help bring in more visitors,' he said.
Johor Baru Small Businesses Association chairman Tey Tian Hwang said some of its members were contemplating shutting down their businesses, but after a review, such sentiments have gone quiet for now.
'However, they have seen the number of customers dwindling, especially in the last week or two, as people try to avoid spending due to uncertainty about their financial future,' he said.
He added that the government should consider looking at profit margin instead of turnover when deciding on the SST threshold.
'It may not be the best yardstick. There are many businesses that may have high revenue but because of increased operational costs, their profit margins are small,' he said.
Meanwhile, Johor Indian Petty Traders and Small Business Association chairman D. Ravin­dran said its members have also started to feel the impact of the expanded SST.
'It has significantly impacted local retail operators, particularly small, medium and micro enterprises, which make up the majo­rity of businesses here,' he said.
'For these businesses, especially in the logistics, services and retail sectors, these changes mean increased costs, new compliance and narrower profit margins.'
He added that the 25% US tariff would worsen the situation as it would contribute to an increase in the prices of products exported to the United States.
'It will affect Malaysian Indians involved in businesses such as exporting spices, ready-to-eat food, and palm oil derivatives, as it makes the goods they export less competitive in the US market.
'This may potentially lead to a decrease in export volumes and prompt US companies to start looking for cheaper alternatives,' he said.
The expanded SST, which took effect this month, now covers more goods and services with tax rates ranging from 5% to 10%.
Separately, the US has also announced a 25% tariff on imports from Malaysia, which is expected to take effect next month.