Latest news with #MalaysiaUniversityofScienceandTechnology
New Straits Times
2 days ago
- Business
- New Straits Times
SST tweaks bring big relief for rakyat
KUALA LUMPUR: The government's move to fine-tune the Sales and Service Tax (SST) will not significantly affect its revenue collection but will have a positive impact on the people, said an economist. Professor Emeritus Dr Barjoyai Bardai, provost at Malaysia University of Science and Technology, said the expanded SST was expected to boost tax collection to RM51.7 billion in 2025, up from the earlier forecast of RM46.7 billion. "I don't see this (tax collection) being affected too much by the exemptions for the beauty sector, apples, oranges and dates, as well as the increased SST registration threshold from RM500,000 to RM1 million for leasing, rental and financial services. "At most, I believe that it would be around RM1 billion to RM2 billion. However, the tweaks will be a big relief for those on the ground." Barjoyai said the exemption for the entire beauty sector would help control inflation as personal care was a key expenditure for many people. "In May, the inflation rate for personal care stood at 3.7 per cent, so this is the right move," he said, citing Statistics Department figures. Barjoyai said the increase of the SST registration threshold to RM1 million would see many micro, small and medium enterprises exempt from paying the eight per cent tax on leasing, rental and financial services. "This is especially important in rural and suburban areas, and for small shops in apartments and flats. Their sales will not reach RM1 million a year." Still, he said, retailers in malls and those with many branches would likely be affected, though he did not believe they would immediately raise prices. "The retail sector is price-sensitive, and competition is fierce. I think they will absorb the increase in costs in the short run and only pass on the costs in the longer run." On the SST exemption for apples, oranges and dates, Barjoyai said this was appropriate as local fruits were not always cheaper than imported fruits. "Mangoes, rambutans and durians, for example, can cost a lot more than apples and oranges. "Overall, the tweaks are a good move, and it indicates that the government is listening to the people." Economist Dr Geoffrey Williams said the SST adjustments would not significantly alter the government's overall tax collection. "The SST will still be effective in improving government income to provide more money for priorities such as health, education and social protection." He added that exempting imported fruits and beauty services would keep prices steady and prevent disruptions to consumer behaviour. Consumers, however, must remain alert and ensure businesses did not take advantage of the situation by unjustifiably raising prices, he added. "Overall, it is a signal that the government is making modest changes and taking stakeholder views into account. "This is a positive approach to tax policy and should make implementation easier," he said. Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said he believed the tweaks reflected the government's intention to strike a balance between financial discipline and taking care of the people's interests. "To some degree, it is a pragmatic move. Perhaps, there should be more time for consultation with industry players so that any final adjustments can be made before the rollout of such measures," he added.
Sinar Daily
6 days ago
- Business
- Sinar Daily
Strait of Hormuz closure threatens Malaysia's food supply, economist forecasts price hikes
SHAH ALAM – A sharp increase in the prices of imported food is expected to be among the most significant direct consequences Malaysia may face if a full-scale war erupts following the United States' involvement in the Iran-Israel conflict. Malaysia University of Science and Technology (Must) economist, Professor Emeritus Dr Barjoyai Bardai, stated that the conflict, which has entered a new phase, could lead to the closure of the Strait of Hormuz, a critical trade route for the country. According to him, imported foods such as fruits and vegetables are among the goods likely to experience a significant price surge if tensions in the region worsen. 'Malaysia, as an open economy that imports more than RM90 billion worth of food, will certainly be affected by this conflict. "It can be said that the food sector will be one of the hardest hit," he said. He stated that the upcoming expansion of the Sales and Service Tax (SST) on July 1, which includes imported fruits and vegetables, could worsen the impact. 'So, the impact will be even greater. Prices of imported goods will rise, then domestic taxes in Malaysia will also increase and inevitably this situation will have a major impact on food items. 'Given the increasingly volatile developments, we can expect the prices of imported food-based items such as vegetables and fruits to go up. "We also anticipate a knock-on effect on cooked food, and prices at restaurants are also expected to rise,' he told Sinar. Dr Barjoyai added that all parties must prepare to face widespread impacts due to the conflict, as it would affect not only imported goods but also locally produced products.
Free Malaysia Today
22-06-2025
- Business
- Free Malaysia Today
Expanded SST offers nation buffer in tough times, say economists
Economists say the expanded SST, which will take effect on July 1, will come in handy in times of global uncertainty. PETALING JAYA : The expansion of the sales and service tax (SST), set to take effect next month, will strengthen the government's fiscal buffer amid rising global uncertainty fuelled by wars, trade tensions, and shifting US policies. Economists say the move could help reduce national debt, raise tax revenue, and create more fiscal space for spending on critical areas such as healthcare, education, and targeted assistance for lower-income households. They also claim it is a safer and less costly option compared to reinstating the goods and services tax (GST), which would take time and effort to restart. Malaysia University of Science and Technology's Barjoyai Bardai said the SST expansion is not aimed at cost savings, but at boosting revenue to help narrow the country's budget deficit. Barjoyai Bardai. 'The government wants to collect more tax so that it can achieve the objective of reducing the deficit in the budget,' he said. Barjoyai said the government expects SST collection to hit RM52 billion this year, a big jump from the RM29 billion collected in its first year, and even higher than GST's peak of RM42 billion. 'If they can collect RM52 billion, then they can prove that SST is even better than GST. I believe SST can be developed into a better tax system than GST,' he said. He said the SST is generally more acceptable to the public as it does not affect consumers directly, with its primary targets being imports and manufacturing. 'So, people don't feel they are being taxed—at least psychologically,' he said. Yeah Kim Leng. Sunway University's Yeah Kim Leng pointed out that the country's tax-to-GDP ratio presently hovers just above 12%, one of the lowest levels in decades. He said the country can no longer depend on petroleum revenue or shrinking income taxes. 'We need to look for sustainable and stable revenue sources. Expanding the SST is a step in the right direction to gradually raise the revenue level so that we do not incur a higher deficit,' he said. Yeah said the additional revenue is needed to cover the rising costs associated with an ageing population, low retirement savings, and the need to improve essential services, particularly healthcare and education. 'It involves some sacrifices, some short-term pain in exchange for future gains. The expanded SST is not overly burdensome. They are targeting only luxury items and goods and services that are not essential,' he said. Afzanizam Abdul Rashid. Bank Muamalat chief economist Afzanizam Abdul Rashid said the SST expansion fits into the broader goal of fiscal reform. He said the service tax hike from 6% to 8% in March 2024 successfully raised SST revenue by 30.3% in the first quarter of 2025. That, together with the rationalisation of diesel subsidies, allowed the government to trim its fiscal deficit from RM26.4 billion (5.7% of the GDP) in the first quarter of 2024 to RM21.9 billion (4.5%) in the same period this year, said Afzanizam. 'This has allowed the government to allocate more for Sumbangan Tunai Rahmah and Sumbangan Asas Rahmah, totalling RM13 billion for 2025, from RM10 billion in 2024. 'This is the evidence of how fiscal consolidation exercises can help the government create a fiscal space so that it can spend on improving the livelihood of the rakyat in the short term,' he said. Afzanizam said that beyond cash handouts, the extra revenue could be channelled to improve productivity through better investment in education, health, infrastructure, and security. The SST expansion, effective July 1, will broaden the tax base to cover more imported goods and services, while keeping essentials tax-free to minimise inflationary pressure. Treasury secretary-general Johan Mahmood Merican said the expanded SST is expected to increase revenue by RM5 billion in 2025 and RM10 billion in 2026.
Sinar Daily
24-05-2025
- Business
- Sinar Daily
Global economic headwinds could halt RON95 subsidy plan
Padu challenges could force reliance on LHDN, EPF for RON95 subsidy. Malaysia University of Science and Technology (MUST) economics expert Professor Emeritus Dr Barjoyai Bardai stated that implementing targeted subsidies in the near term would be impossible. SHAH ALAM – The government's proposed RON95 fuel subsidy rationalisation, initially slated for mid-year, may be delayed until the trade negotiations between the United States and China are fully resolved. Malaysia University of Science and Technology (MUST) economics expert Professor Emeritus Dr Barjoyai Bardai stated that implementing targeted subsidies in the near term would be impossible. "I foresee the possibility of the government postponing the implementation of RON95 fuel subsidy rationalisation if the global economic situation becomes suddenly serious after the next 90 days. 'If the US proceeds with its previously announced plans regarding new tariff rates and if the whole world is hit by an economic downturn, we'll see price hikes, a crash in our stock market, the ringgit depreciating. "If that happens, the government will be forced to delay the plan. "However, I believe the plan will still be pursued, especially following the positive outcomes seen after the diesel subsidy rationalisation," he told Sinar. It was reported on Monday that the Cabinet has handed the decision regarding the RON95 fuel subsidy rationalisation proposal entirely to the Finance Ministry (MoF). Economy Minister Datuk Seri Rafizi Ramli confirmed his ministry had discussed the matter with the Cabinet four times and is now awaiting updates from the ministry led by Prime Minister Datuk Seri Anwar Ibrahim. When asked if the Central Database Hub (Padu) application system would still be part of the rationalisation plan given the change in the managing ministry, Barjoyai suggested it might not utilise data from the new system. He based this view on the low number of Malaysians currently registered in Padu, which makes comprehensive data collection challenging. 'I don't think Padu can be used yet, because only around eight million people have filled in their information. There are still about 20 million who haven't. If the government proceeds with this targeted subsidy plan, they may have to rely on third-party data sources like the Inland Revenue Board (LHDN) and the Employees Provident Fund (EPF),' he said. On the appropriate timing for implementing the subsidy targeting, Barjoyai believes it can still be done this year, given the positive developments observed after the diesel initiative. 'There's no denying that many were sceptical when the diesel subsidy rationalisation was implemented, but now a lot of people are praising the government's move. The economy is really a study of perception. If we can manage perception well, God willing, it will have a positive impact too,' he added.
