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The Sun
3 hours ago
- Business
- The Sun
Three key amendments to SST following feedback
PETALING JAYA: The government has announced three key amendments to the Sales and Service Tax (SST) following public and industry feedback since the revision was unveiled on June 9. In a statement yesterday, the Finance Ministry said the amendments include exempting certain imported fruits from sales tax, raising the service tax threshold for rental and financial services to RM1 million and dropping the proposed tax on beauty services. 'After due consideration on the feedback received with respect to sales tax on imported fruits, Prime Minister Datuk Seri Anwar Ibrahim, who is also the Finance minister, agreed to exempt imported apples, oranges, mandarin oranges and dates from sales tax. 'The ministry would like to reiterate that the Madani government has not imposed sales tax on daily essential goods in order to mitigate pressure on the cost of living for the majority of Malaysians. 'These tax-exempted essential goods, whether locally produced or imported, include rice, chicken, beef, vegetables and eggs. Local fish varieties, including selar, tongkol, cencaru, and sardines will also continue to be exempt from sales tax.' To ease the burden on small businesses, Anwar has approved an increase in the service tax registration threshold from RM500,000 to RM1 million for leasing, rental, and financial services. 'Additionally, after carefully considering public sentiment, the government has also decided not to proceed with the proposed expansion of service tax on beauty services such as manicure and pedicure, facial service, barbers and hairdressers,' said the ministry.
The Sun
3 hours ago
- Business
- The Sun
Malaysia drops beauty tax, eases SST rules after feedback
PETALING JAYA: The government has announced three key amendments to the Sales and Service Tax (SST) following public and industry feedback since the revision was unveiled on June 9. In a statement yesterday, the Finance Ministry said the amendments include exempting certain imported fruits from sales tax, raising the service tax threshold for rental and financial services to RM1 million and dropping the proposed tax on beauty services. 'After due consideration on the feedback received with respect to sales tax on imported fruits, Prime Minister Datuk Seri Anwar Ibrahim, who is also the Finance minister, agreed to exempt imported apples, oranges, mandarin oranges and dates from sales tax. 'The ministry would like to reiterate that the Madani government has not imposed sales tax on daily essential goods in order to mitigate pressure on the cost of living for the majority of Malaysians. 'These tax-exempted essential goods, whether locally produced or imported, include rice, chicken, beef, vegetables and eggs. Local fish varieties, including selar, tongkol, cencaru, and sardines will also continue to be exempt from sales tax.' To ease the burden on small businesses, Anwar has approved an increase in the service tax registration threshold from RM500,000 to RM1 million for leasing, rental, and financial services. 'Additionally, after carefully considering public sentiment, the government has also decided not to proceed with the proposed expansion of service tax on beauty services such as manicure and pedicure, facial service, barbers and hairdressers,' said the ministry.
The Star
5 hours ago
- Business
- The Star
Deserving students priced out
Cause for concern: Dr Wee (centre) showing a list of courses run by several public universities with higher tuition fees offered through the open entry route during a press conference in Kuala Lumpur. With him are (from left) MCA Youth national exco Tay Kok Wea, Wanita MCA Beliawanis chief Ivonne Low Yi Wen, Wanita MCA deputy chief Tee Hooi Ling and Wanita MCA Selangor Beliawanis bureau chief Joclyn Leong Fong Yi. — LOW LAY PHON/The Star KUALA LUMPUR: The rising reliance on direct or open entry routes into public universities is drawing criticism for creating financial barriers that exclude deserving students, especially those from underprivileged and middle-income backgrounds. 'We must re-evaluate this system when public universities begin to act like private institutions, moving away from their noble goal of helping bright students, particularly from underprivileged backgrounds, succeed,' MCA president Datuk Seri Dr Wee Ka Siong said at a press conference yesterday. He said the issue now extends beyond Universiti Malaya (UM), as other institutions such as Universiti Sains Malaysia, Universiti Kebangsaan Malaysia, Universiti Putra Malaysia, Universiti Teknologi Malaysia and Universiti Utara Malaysia are also adopting similar practices. Dr Wee said the way these open channels operate is concerning, as it prioritises financial capability over academic merit, undermining the foundational ethos of public education. On Tuesday, Dr Wee highlighted UM's sharp fee increase under its Saluran Terbuka Universiti Malaya direct admission channel. For the 2025/2026 session, fees for medical and other critical courses soared by 67.1%, rising from RM299,200 to RM500,000. In contrast, students entering via the government-subsidised UPUOnline channel pay only RM15,000 for the same programme. Dr Wee noted that many parents had contacted him to share their concerns after he brought attention to the UM case. 'Their children applied through the UPUOnline system, only to receive an acceptance offer contingent on paying up to RM300,000 through the open channel. 'This financial burden is insurmountable for most families, turning what should be a joyous occasion into one of despair,' he said. Dr Wee stressed that public universities are funded by taxpayers, with Parliament approving annual budgets to cover staff salaries and operational costs. While acknowledging that the funding may not be sufficient for all development expenses, he said this should not come at the expense of deserving students who qualify through the UPUOnline system. Citing a previous parliamentary reply, Dr Wee said 19% to 40% of public university placements now come from open channels, highlighting a systemic issue that could erode the very foundation of Malaysia's public education system. 'I firmly believe that UPUOnline should remain the primary and most important channel for enrolment in public universities. 'This ensures admissions are based on merit rather than financial ability, thus promoting social mobility and allowing underprivileged students to transform their lives through quality and affordable education,' he said. The current trajectory, he warned, risks turning the education system into an elitist one, where only the financially privileged can access quality education. Dr Wee said the total cost of completing a medical degree at a public university has surged from about RM300,000 to over RM500,000, exceeding the fees charged by some private institutions. 'Similar hikes of 20% to 30% have been observed in other professional courses like law, raising questions as to whether public universities still prioritise talent development or have shifted towards a quasi-private model. 'While direct admissions can exist, public universities should expand their intake instead of using slots meant for UPUOnline students,' he said. Dr Wee urged the government to establish a royal commission of inquiry to review these practices. 'We cannot allow financial capability to replace academic merit in determining university admissions. 'The government should intervene immediately to prevent further inequality in access to higher education. 'It should remain a public right, not a privilege,' he said, calling for the open channel intake to be halted.
The Star
6 hours ago
- Business
- The Star
SST better suited for post-pandemic economy
MALAYSIA'S upcoming implementation of the revised Sales and Service Tax (SST) on July 1 has reignited public concerns over possible increases in the cost of living and inflationary pressures. Memories of the Goods and Services Tax (GST) era remain fresh, raising questions about whether the new SST model will be more sustainable or merely a repeat of the past. However, tax experts say the SST, in its current form, offers a more targeted and less burdensome approach — particularly for lower- and middle-income households. According to Malaysian Association of Tax Accountants (MATA) deputy president Dr Mohd Fairuz A Razak, unlike GST, the SST is not imposed at every stage of the supply chain. 'GST was a multi-stage tax, which affected almost every level of transaction — even basic goods — unless they were zero-rated,' he said. 'In contrast, SST is a single-stage tax, typically applied at the manufacturing or service-provider level. This avoids the risk of cascading taxes or 'tax-on-tax' scenarios.' Mohd Fairuz noted that SST is not imposed on most essential items such as rice, vegetables, fish and medication, offering greater relief for households in the B40 and M40 groups. 'For example, items like sanitary pads and soap, which were previously taxed under GST, are now exempt under SST. This has a direct impact on household spending and cost-of-living management,' he said. The simplified structure also helps stabilise retail prices, as goods are taxed only once in the supply chain. In addition to being consumer-sensitive, the SST system is seen as more friendly to small and micro businesses. 'The registration threshold for SST is RM500,000 in annual turnover. This means many micro and small enterprises, especially those just starting out, are not required to register or collect taxes,' Mohd Fairuz explained. This, he said, helps reduce compliance costs and complexity for small vendors, especially those operating in night markets, roadside stalls, and informal sectors. 'SST also eliminates the need for complex accounting systems. Small businesses can rely on basic bookkeeping, without investing in expensive ERP or tax software,' he added. This simpler compliance structure, he said, gives confidence to small traders to formalise their operations without fear of burdensome regulations. Mohd Fairuz also highlighted how SST places more emphasis on discretionary or luxury items, rather than daily essentials. 'Luxury bicycles, imported fruits, salmon, five-star hotels, insurance and entertainment services are among those that will be taxed. These are typically consumed by higher-income groups who can afford to pay more.' 'This approach is more equitable and aligns with the principle of progressive taxation,' he said. From a broader perspective, the reintroduction and expansion of SST is part of a larger fiscal reform agenda, one that aligns with Malaysia MADANI's core values of compassion (ihsan), responsibility, and justice. Mohd Fairuz said the SST structure encourages wealthier Malaysians to contribute more to national revenue, while ensuring that vulnerable groups are not unduly affected. 'It is a more socially conscious tax model. While GST might have generated more revenue, SST strikes a better balance between collection and citizen well-being—especially in a post-pandemic recovery period,' he said. He also pointed out that SST is easier to monitor and less susceptible to fraud, due to its simpler design. 'Revenue collected can go directly into funding targeted subsidies, public healthcare, education and infrastructure.' While SST may not bring in as much revenue as GST, Fairuz argued it is a more sustainable tool for long-term fiscal management. Looking ahead, he said there's still room for improvement. 'The government should continue exempting essential goods, while synchronising SST with digital systems like e-invoicing to enhance transparency.' 'There's also a need to review SST thresholds and rates periodically and consider introducing limited input tax credits for certain industries.' Ultimately, he added, taxation systems should be designed not just to raise revenue — but to serve the people. 'When implemented with care, SST can be a key fiscal instrument rooted in Madani values — fair, transparent and people-centric.'
New Straits Times
6 hours ago
- Business
- New Straits Times
Mismatch widens as housing supply overlooks majority demand
KUALA LUMPUR: The supply of residential properties in Malaysia continues to diverge from actual demand, with developers favouring mid- to high-end units while most Malaysians, particularly those in the B40 and M40 income groups, struggle to afford suitable housing. Dr Suraya Ismail, Director of Research at Khazanah Research Institute (KRI), said this supply-demand imbalance has led to a growing number of unsold units and limited options for lower-income buyers. "This raises a crucial question. Are Malaysians being presented with a clear and transparent view of the actual state of the property market?" Despite evident signs of oversupply, especially in the Klang Valley, developers are still launching new projects at a steady pace, she said. Current data shows a substantial volume of completed but unsold properties, mainly in the mid- to high-end segment, such as serviced apartments and condominiums in urban centres, she told Business Times. Suraya noted that developers, often backed by strong financing or public-private partnerships, remain confident in long-term market corrections or sustained demand. But she questioned whether such optimism is justified in light of persistent affordability issues. According to her, Malaysia's housing market is suffering from a mismatch between effective demand, defined as what households can afford, and the type of housing being supplied. While prices have risen steadily over the years, they've outpaced income growth, making homes unaffordable for a significant share of the population. The Real Estate and Housing Developers' Association Malaysia (Rehda) declined to respond to questions sent by Business Times. Meanwhile, Suraya said that despite an evident glut in the higher-end segment, housing supply continues to target the top income groups. For example, in 2022, Malaysia's affordable median house price was RM228,168, three times the median annual household income. Yet, only 10.7 per cent of new launches were priced below RM200,000. In contrast, units priced above RM500,000 made up 24.7 per cent of launches in 2022 and rose to 39 per cent in 2023. Between 2020 and 2023, most transactions, 709,283 units, were for homes priced below RM500,000. Properties under RM300,000 made up 56.2 per cent of total sales, highlighting strong demand in the affordable segment. Suraya noted that a closer look at 2023 sales and overhang data reveals the same pattern. Units priced below RM300,000 accounted for 53 per cent of total sales. Yet of the 25,816 overhang units recorded in the fourth quarter of 2024 (Q4 2023), 70.6 per cent were homes priced above RM300,000. "This suggests a strong demand for affordable housing following the population's income brackets, while higher-priced properties encounter challenges in finding buyers. The data highlights the struggle of higher-priced units to attract buyers, resulting in a higher share of overhang," she said. Suraya added that the market has consistently scored above 3.0 on the housing affordability index, signifying 'seriously unaffordable' conditions. Between 2012 and 2014, the median house price rose from RM170,000 to RM270,000 at a compound annual growth rate (CAGR) of 23 per cent, while household income grew at less than half that rate, only 11.7 per cent. "In high-density areas like Kuala Lumpur, Selangor, and Johor, many developments are struggling to sell remaining units. This trend highlights a growing mismatch between supply and actual demand, especially in an environment of stagnant wage growth and tighter lending rules. As stated earlier, the supply is not catering for the realities on the ground. Why, then, are new project approvals continuing unabated? "Approvals are given at the state level and local municipal councils, but there is a gap in the information for the efficient coordination of house prices and the general affordability of the local populace. This could be assisted if developers could give an indication of the feasibility of sales for their plot of land, whether it caters to effective demand, that is, the pricing threshold that the local population could afford, or not exacerbating the glut of supply (overhang and unsold units) within the area, for the approval of development order (DO)." While official NAPIC figures highlight the growing property overhang, defined as units completed but unsold for more than nine months, Suraya cautioned that the problem may be larger than reported. "Are we only seeing the tip of the iceberg? Well, it can be an underestimation," she said. Rethinking property investment: Is it still worth it for Malaysians? With evolving market dynamics, rising rental risks, and slowing capital gains, many are questioning whether property remains a sound investment for the average Malaysian. Suraya pointed to a growing rental supply in areas like Mont Kiara, Bangsar South, KL Eco City, Subang, Shah Alam, and Cyberjaya. Tenants now hold the upper hand, while landlords often accept rental yields below their mortgage costs, a sign of deeper market weaknesses, she said. She cautioned against the practice of setting rental rates solely to cover mortgages, calling it a strategy used by speculative rather than professional landlords. "Rental yields should not be pegged to cover mortgage costs. This is normally practised by speculative landlords, not professional landlords. Speculative landlords artificially inflate the rental market by wanting to cover their mortgage payments, rather than deriving the price of rentals based on the liveable conditions of the homes supplied," she said. She noted that in any mature market, rental trends serve as a litmus test for real demand. Units that can't fetch viable rental rates often reflect oversupply, pricing mismatches, layout inefficiencies, or poor supporting infrastructure. "We must find a way to extract more information about rental prices for analysis. One method is to formalise the rental market with a Rental Tenancy Act. Then, we can access and monitor the rental market to protect the interests of landlords and tenants," she said. She also raised concerns over Joint Management Bodies (JMBs) enforcing "minimum rental rates" to preserve property values, a practice that, while legal, can distort real demand and limit affordability. While framed as a move to preserve property value, critics argue this amounts to cartel-like behaviour that artificially props up prices, hurting owners who need rental income and distorting market signals. "If such practices are indeed happening, they obscure the true softness in rental demand and delay the price corrections needed to make properties accessible to genuine end-users. What are the implications for prospective buyers, investors, and policymakers? "Unfortunately, the values or the opportunistic behaviour of people become institutionalised in the JMB's house rules. That is the democratic disadvantage of consensus, as stipulated in the Strata Act, because it calls for voting on any house rules, and the majority wins. "Currently, most collective actions are for profiteering and not catering to individual plights nor the common good of the less advantaged in the group. Such is the state of our value system. However, distressed individual unit holders could try to negotiate the house rules of the majority by invoking their claim on property rights to the COB." To address the oversupply of high-rise units that fail to match demand, she urged the Housing Ministry (KPKT) to monitor the market using robust housing indicators, such as rent-to-income and price-to-income ratios. "Housing is viewed as both an asset and a shelter. If housing is viewed as an asset-based income, then the CAGR of household wages will never be commensurate with the rapid price escalation of housing as an investment. Therefore, slower capital appreciation is good for the general affordability of all first-time home buyers. She highlighted the conflicting interests in the market, between homeowners, investors, professional landlords, and those seeking affordable shelter. Indicators like the rent-to-income ratio are vital for shaping targeted policies, such as when and how to transition people from public to private rentals. Suraya stressed the importance of promoting both renting and ownership as viable choices but warned that affordability must come first. Speculative activity, particularly in the mid-income housing segment, is damaging the market's long-term sustainability, she said. Suraya said tackling the growing imbalance in the property market requires inclusive dialogue among all key stakeholders, including KPKT, local councils, town planners, Rehda, the National House Buyers Association, the National Property Information Centre (Napic), auctioneers, secondary market specialists, economists, and urban policy researchers. "It is not about who leads and who adopts, but more about building a consensus for the overall 'collective or common good'. This might mean that we need to seriously discuss the housing sector's objectives for all types of diverse interests." Is the property glut worse than it seems? While NAPIC data reports tens of thousands of unsold completed units, the figures fall short of capturing the full extent of Malaysia's housing oversupply, according to Tan Wee Tiam, executive director of Olive Tree Property Consultants. Notably absent are under-construction units with little buyer interest, also known as "shadow inventory", and vacant purchased units that remain unoccupied, adding to supply without meeting real housing needs. Tan noted that the overhang is largely concentrated in the RM500,000 and above segment, far beyond the affordability of most Malaysians. Meanwhile, genuine demand persists in the sub-RM300,000 range, but these affordable units often lack adequate connectivity, infrastructure, and amenities. Aggressive sales tactics, such as rebates, furnishing packages, and deferred payments, may artificially boost take-up rates, masking the true health of the market and distorting price signals, he told Business Times. "Napic data merely gives macro data on the overhang figures and value. We believe it is more useful for Napic or another centralised data centre to collate data on all the sold units when a caveat is lodged, buyers nationalities and other essential information. "Prices, type of property, built-up area, etc., will be crucial for developers and the prospects to better understand the true picture of the property market in a timely manner. Identities of the vendors and purchasers should be provided so that we can know whether they are related party transactions," he said. Tan said that disclosing buyer nationalities can shed light on the real extent of foreign interest, helping distinguish genuine international demand from market hype. Furthermore, he said that understanding whether units are owner-occupied or investor-held (and possibly left vacant) is vital for assessing true occupancy trends. Such transparent, granular data would not only enhance market insights for developers and policymakers but also empower buyers and investors to make more informed decisions in an increasingly opaque landscape, he said. Tan believes that property is still a viable investment for the average Malaysian. He said that property has long been regarded as a cornerstone of wealth creation in Malaysia, but evolving market dynamics have raised critical questions about its viability for the average investor. He noted several factors reshaping the landscape. "Wages haven't kept pace with rising home prices. Malaysia's median house price is now about five times the median annual income, well above the affordability benchmark of 3.0. Persistent oversupply in the mid- to high-end segment has led to depressed rental yields, often in the range of just 2 per cent to 4 per cent, which may not even cover mortgage repayments and maintenance costs. "Tighter lending conditions and rising interest rates have further limited access to home financing, especially for younger and lower-income groups. As a result, many younger Malaysians are diversifying into alternative investment avenues such as Real Estate Investment Trusts (REITs), exchange-traded funds (ETFs), and digital platforms offering robo-advisory services, which often promise better liquidity, lower entry costs, and less risk exposure." Still, he said property investment is not entirely off the table. It remains a viable long-term asset class for those who conduct careful due diligence, understand demand patterns and local market conditions, adopt a realistic investment horizon, and are prepared to start small and scale up gradually. Tan noted that timing also plays a critical role.
