Latest news with #ChinCheeSeong
New Straits Times
20 hours ago
- Business
- New Straits Times
F&B operators aim to stay resilient amid SST and cost pressures
KUALA LUMPUR: Food and beverage (F&B) prices are expected to rise as operators manage higher costs under the expanded Sales and Service Tax (SST), industry groups say. Associations representing restaurants, retailers and small and medium enterprises (SMEs) noted that the eight per cent SST on services, including commercial rentals, combined with rising input costs will leave many businesses with little choice but to adjust prices, despite the risk of losing some customers. Persatuan Pengusaha Restoran Muslim Malaysia (PRESMA) president Datuk Jawahar Ali told Business Times that prices are likely to increase in certain segments, especially those already operating on tight margins. "While many operators are trying their best to absorb the cost, cumulative increases from SST, higher raw material prices and rising labour costs make it very difficult to do so. "Our members are encouraged to be transparent with customers by displaying breakdowns of pricing and tax where possible, as well as communicating the reason for any price adjustment clearly to avoid misunderstanding or loss of trust," he said. Meanwhile, SME Association of Malaysia national president Dr Chin Chee Seong said a price increase in the F&B sector is widely expected following the implementation of the revised SST, driven largely by the tax on commercial rentals, which is set to cascade through operating costs and ultimately impact menu prices. "For many F&B operators, rental constitutes a significant portion of fixed overheads, especially in high-traffic malls or prime commercial locations. "The imposition of an 8 per cent tax on rental charges directly increases cost burdens, which most businesses find difficult to absorb without adjusting their pricing structures," he added. Chin also said that the sector is highly price-sensitive; hence, marginal increases can influence consumer behaviour. "Operators fear that price hikes may lead to lower footfall, reduced frequency of visits, or a shift in customer preferences towards home-cooked alternatives or lower-cost options," he said. Short notice and uneven readiness While some larger chains are ready for the rollout, many small and medium-sized operators remain unprepared. The Small and Medium Enterprises Association (Samenta) national president Datuk William Ng said larger SMEs, especially those in the retail and F&B sectors with modern point-of-sale (POS) systems, tend to be more prepared, while smaller ones are still in the midst of adjusting. "It's not as simple as updating the POS. You need to reprint materials, price lists, and signages and train employees on the expanded SST, especially if you are caught with multiple tiers of SST. "In fact, some manual POS do not have the option of adding a second or third button for varying SST levels," he said. Ng added that many SMEs remain hesitant about whether to pass the tax burden onto consumers, caught between the risk of losing customers in a highly competitive, price-sensitive market and the strain of absorbing additional costs amid weak consumer spending. "Micro and small enterprises are disproportionately affected, despite the revenue threshold. Many do not have access to proper accounting support or digital tools, making compliance more challenging. "Awareness and understanding of SST regulations are also limited in this group. Without targeted outreach and education, there is a risk of non-compliance, either inadvertently or out of necessity," he warned. Bumiputra Retailers Organisation president Datuk Syed Naqiz Shahabuddin Syed Abdul Jabbar added that although larger franchises are likely compliant, many SMEs and independent eateries are still adapting, especially those newly crossing the RM1.5 million annual revenue threshold for mandatory registration. Despite a Customs Department grace period for penalty-free adjustments until December 2025, he said uncertainty around taxable services and implementation procedures persists. "The transition period is tight and many are still finalising changes, particularly in ensuring system accuracy and customer communication," Syed Naqiz Shahabuddin said. Datuk Jawahar said not all POS vendors serving PRESMA members are ready to deliver the necessary system updates, especially for operators still using older systems. "There's also confusion on how exactly to apply SST for dine-in versus takeaway or delivery orders, which complicates system setup and pricing," he added. This, he said, poses significant challenges for small F&B operators, many of whom lack the technical capability to update their POS systems quickly. The additional costs for software upgrades, staff training and accounting support also place further strain on already thin profit margins. Chin Chee Seong warned that the expanded SST, combined with other cost pressures like new EPF contributions for foreign workers, higher electricity and gas tariffs, and logistics costs, would significantly erode profit margins. "The SST regime is widely perceived by our members as less business-friendly compared to GST. SST's cascading tax effect, coupled with its limited input tax credit mechanism, reduces transparency and increases compliance burdens, especially for service-based SMEs. "Most SMEs anticipate that the increased tax burden will inevitably be passed down to consumers, which is expected to contribute to rising inflation, with many estimating inflation could rise up to 5.0 per cent in 2025, driven by higher retail and service prices," he said. While businesses exceeding RM1 million in annual revenue are clearly mandated to register and comply, Chin said even those below the threshold face confusion and operational strain, especially with the upcoming implementation of e-Invoice. Calls for policy review and gradual rollout In response, associations are urging the government to revise the SST implementation approach. PRESMA called for a grace period for enforcement, clearer sector-specific guidelines and a public awareness campaign to manage expectations. "We are not against taxation, but we believe a more gradual, better-informed rollout will ensure fairness and long-term sustainability for both the government and the business community," Jawahar said. The Bumiputra Retailers Organisation proposed deferring SST on rental services until economic conditions stabilise and raising the SST registration threshold for rental income to RM5 million to support micro and small businesses. The SME Association of Malaysia urged the government to immediately postpone or reconsider the implementation, particularly with regard to rental and leasing charges, which pose significant risks to business sustainability across multiple sectors. Chin said the revised tax will dampen the growth and resilience of SMEs, many of whom are already struggling with rising operational costs and limited margins. He said the additional tax burden will inevitably be passed on to consumers and is likely to drive inflation in the coming year, further weakening consumer spending and economic stability. "We call for a comprehensive, evidence-based impact assessment, coupled with meaningful engagement involving all affected stakeholders, including industry associations, SMEs and business leaders. "A policy of such significance must be shaped through inclusive dialogue to ensure that it is both economically sustainable and socially equitable," he added.
New Straits Times
21 hours ago
- Business
- New Straits Times
SST revision welcomed, but broader relief needed for MSMEs
KUALA LUMPUR: The government's move to raise the sales and service tax (SST) registration threshold to RM1 million is seen as a positive step that offers some breathing space for micro, small and medium enterprises (MSMEs), although wider structural challenges remain. Small Medium Enterprise (SME) Association of Malaysia president Chin Chee Seong said the higher threshold will ease some cost pressures for small landlords and tenants, providing modest relief for smaller businesses working hard to stay afloat in a tough economic climate. However, he noted that many MSMEs, especially those renting from large commercial property owners, will still have to bear the eight per cent service tax, meaning the tax burden will continue to weigh on businesses already struggling with tight margins, rising costs and subdued consumer spending. "As such, the tax burden continues to cascade onto small businesses, many of which are already grappling with razor-thin margins, inflationary pressures, and weak consumer demand," he told Business Times. Chin pointed out that the higher threshold is unlikely to have a significant impact on government revenue, as it mainly exempts a small group of smaller service providers. He cautioned, however, that the larger economic impact of not easing the SST burden for MSMEs could include business closures, job losses and higher prices for consumers, outcomes that could ultimately cost more than the short-term tax revenue gained. He added that the government must prioritise long-term economic resilience over marginal revenue expansion, particularly when over 60 per cent of Malaysia's gross domestic product (GDP) is driven by domestic consumption and SME activity. On the exemption of imported fruits such as mandarin oranges and dates from the sales tax, Chin described it as a thoughtful gesture that will help keep prices stable during key festive periods like Chinese New Year and Ramadan, benefiting many low- and middle-income households. He noted that this can help keep prices stable during festive seasons and provide small relief for low-income and middle-income households. However, Chin said the impact on overall inflation will be very small, as these fruits make up only a small part of what people usually spend on. "Without addressing bigger cost issues like the eight per cent SST on commercial rentals, high logistics costs, and rising prices of goods. "This exemption won't make a big difference in controlling inflation. In short, while this is a welcome and symbolic gesture, it should be part of a broader and more effective plan to control rising costs and support consumer spending," he said. Overall, Chin said the government's decision to revise the SST, particularly by exempting beauty services and raising the registration threshold, shows it is responding to public concerns and industry feedback, which is a positive step. He added that it reflects a move towards more targeted and thoughtful tax policies, instead of applying the same rules to everyone. However, Chin said these decisions also highlight a reactive approach made after pushback, rather than based on proper economic analysis or early consultation. He added that making tax changes in bits and pieces can cause confusion, create loopholes, and make the system harder to manage. "To build trust and ensure fairness, the government should develop a clearer, long-term tax strategy based on actual business data and input from all affected sectors. "A more structured system, perhaps reconsidering goods and services tax (GST) with input tax credits, may offer a fairer and more sustainable solution in the long run," 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. As part of the revised plan, imported mandarin oranges and dates will be exempted from the sales tax, while essential goods such as rice and local fish will remain tax-free. The service tax registration threshold has been raised to RM1 million for selected sectors, easing compliance for small businesses. The government has also scrapped the proposed service tax on beauty and personal grooming services such as manicures, pedicures, facials, barber services, and hairdressing.
The Star
2 days ago
- Business
- The Star
Call to review SST for SMEs
PETALING JAYA: The revision of the Sales and Services Tax (SST) thresholds for rental and leasing services represents a step forward, but industry experts argue that without accompanying structural reforms, Malaysian small businesses will continue to struggle in the challenging economic climate. SME Association of Malaysia president Dr Chin Chee Seong said that more should be done to address challenges faced by small businesses. ALSO READ: Traders brace for cost hikes, weaker spending 'The current revision to the SST threshold, while helpful to a small segment, does not fully address the systemic pressures MSMEs face,' he said. Chin pointed out that among the additional support to small businesses are tax policy recalibration, reintroduction of input tax credit or tax offset mechanism and stronger digitalisation and compliance support. He explained that recalibrating tax policy based on tenant size would shield MSMEs from burdensome tax costs, particularly in high-rent urban areas. 'The vast majority of landlords in urban centres including commercial building owners, mall operators and property investment companies easily exceed the RM1mil threshold. 'As such, most MSMEs renting from these landlords will still be charged the 8% service tax, resulting in an unavoidable increase in their operational costs,' he said, suggesting the threshold should be set at RM2mil or higher. On Friday, the Finance Ministry announced revisions on the expanded SST which is due to begin on July 1. Among others, the annual sales threshold for mandatory Service Tax registration has been raised from RM500,000 to RM1mil for leasing, rental, and financial services. Chin also urged the government to consider the reinstatement of a more structured tax framework, citing Goods and Services Tax (GST), or a hybrid model that could reduce double taxation. 'Many MSMEs lack digital tools or accounting systems to manage SST compliance and the incoming e-invoicing mandate. 'Expand access to subsidised point-of-sales systems, accounting software, and e-invoicing tools under programmes like MSME Digital Grant or Penjana,' he said when explaining about the need for digital transformation for MSMEs. 'If the government is serious about enabling MSMEs, the backbone of Malaysia's economy, to remain competitive and resilient, it must go beyond symbolic tax threshold adjustments. 'What is required is structural reform, practical support, and policy empathy that takes into account the fragile business environment, rising operating costs, and the need for long-term sustainability,' added Chin. Federation of Malaysian Business Associations vice-chairman Nivas Ragavan agreed with the need for a higher threshold. While the RM1mil threshold was positive and meaningful for MSMEs, he cited factors such as high operational costs in the urban areas. As such, he said there should be a further increase to RM1.5mil or introduce a tiered threshold according to sectors. This was to provide more room for MSMEs to scale before being burdened with tax obligations, he said. Nevertheless, Nivas agreed that the revision would allow the sector to keep prices more affordable for consumers. 'It would also allow MSMEs to retain margins or reinvest in business development and reduce administrative distractions so they can focus on their core business,' he said. As part of further support to small businesses, Nivas suggested that there should be a simplified taxation system for MSMEs, like introducing presumptive tax systems.
New Straits Times
4 days ago
- Business
- New Straits Times
SME awards roadshow in Sarawak drawn over 150 key figures
KUALA LUMPUR: The recent 2025 Platinum Business Awards (PBA) National Roadshow in Kuching attracted more than 150 key figures. This included local business leaders, government representatives and financial institutions. The roadshow highlighted the progress and opportunities within Sarawak's small and medium enterprises, said the SME Association of Malaysia. The roadshow was not just about promoting the awards, but also functioned as a valuable platform for strategic discussions and the exchange of insights and experiences, it added. National president Dr Chin Chee Seong said the Sarawak state government had demonstrated a firm commitment to advancing SME development, with efforts extending beyond urban centres into rural areas. He added that the approach underscores the state's solid infrastructure and supportive policies, which are creating exceptional growth prospects for SMEs, especially in sectors such as agriculture, food security, and their associated value chains. "SMEs need more than just financial support, they require technological transformation and market integration. "We aim to leverage resources from our nationwide branches to foster cross-sector collaboration among members, shifting from traditional businesses to new areas such as digitalisation, agri-tech and renewable energy," Chin added. Advisor to the Sarawak Ministry of International Trade, Industry and Investment, Datuk Seri Mohd Naroden Majais said the Platinum Business Awards remain a key platform for acknowledging the exceptional accomplishments of small and medium-sized enterprises. "This year's evaluation criteria place greater emphasis on corporate culture and sustainability, underscoring that true success goes beyond profit. "It comes from how a business treats its people, gives back to society, and protects the environment. Despite challenges, many SMEs have demonstrated remarkable resilience and adaptability," he added.
New Straits Times
23-06-2025
- Business
- New Straits Times
2025 Platinum Business Awards roadshow reaches oil-rich Miri
KUALA LUMPUR: The 2025 Platinum Business Awards (PBA) national roadshow made its debut to the oil-rich city of Miri in Sarawak today, drawing the participation of nearly 60 entrepreneurs and business leaders from various industries. PBA's organiser SME Association of Malaysia said the roadshow focused on promoting and introducing the awards' core values, evaluation criteria and nomination process to the business community in Miri. The aim was to encourage more local enterprises to take part in this prestigious national platform and strive for greater recognition. Sarawak transport minister Datuk Seri Lee Kim Shin said Miri is not only an important city in the state but also a crucial part of Malaysia's industrial development journey, where the entrepreneurs have laid a solid foundation with courage and determination. "PBA is more than just an honour, it is a reflection of a company's resilience and core values. It recognises those who stay true to their mission in challenging times, continue to create value and dare to innovate. "I hope Miri's outstanding businesses will shine through this year's awards and stand tall on the national stage," he added. The association's national president Dr Chin Chee Seong said the roadshow also engaged with local SME community and recognise the efforts of the Sarawak SME Association in nurturing entrepreneurs. "SMEs are currently facing numerous challenges, including rising operating costs, minimum wage hikes, e-invoicing implementation and fuel price adjustments. We will continue to be a voice for SMEs," he said. He urged SMEs in Miri to join the Sarawak SME Association to amplify their voices at both the state and national levels. Sarawak SME Association president Jordan Ong said SME Malaysia and the former continue to expand influence and strengthening engagement with SMEs across the states. "Bringing this prestigious national award to such a vibrant city is timely. It allows us to connect, share experiences and recognize the exceptional business talents nurtured on this land," Ong added. Organising chairman of the 2025 PBA, Yeow Wah Fuong, said this year's evaluation framework centres around three core values, which is leadership, integration and sustainability that aim to identify outstanding enterprises with strong business foresight. He added that the 2025 edition features 21 award categories spanning various sectors from technology and environmental innovation to service excellence and corporate culture, ensuring a broad platform for companies of different scales and industries to be recognised.
