Latest news with #SME)AssociationofMalaysia
New Straits Times
30-06-2025
- 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.
New Straits Times
06-06-2025
- Business
- New Straits Times
SME group: Op Gasak enforcement poorly communicated to businesses [WATCH]
KUALA LUMPUR: The Small and Medium Enterprise (SME) Association of Malaysia has raised concerns over the lack of early and clear communication regarding Op Gasak, an ongoing operation targeting misuse of subsidised liquefied petroleum gas (LPG), saying it has left many small traders confused and anxious. Its president, Dr Chin Chee Seong, said the enforcement move, which involves scrutiny of gas usage and permits, was not properly communicated to industry players, particularly micro and small enterprises. "There may have been official dissemination of information, but nothing was directly conveyed to us or to other associations that represent small businesses," he told the NST's Beyond the Headlines. Chin said the operation's name itself — Op Gasak — was vague and raised more questions than answers. "Some SMEs are unsure if this is a swift government action or a harsh crackdown. When it involves subsidies, especially for gas, it's a sensitive issue for micro enterprises. Many of them aren't even classified as SMEs officially, yet they are affected." He said small traders were confused about compliance requirements, particularly the cap on subsidised gas cylinders. "Many of them didn't even know that after using three 14kg domestic cylinders, they must switch to the commercial 50kg tank — which costs almost double at RM70, even though it's the same gas," he said. While these regulations have existed for some time, Chin said they were not widely communicated because enforcement was previously lax. "Now, with stricter enforcement under Op Gasak, many feel blindsided. Different media sources have shared conflicting information, which contradicts what the ministry announced. This inconsistency has made things worse," he added. He called on authorities to engage more closely with business associations to ensure clearer communication in future. "When we're not engaged, we're confused too — and we don't know how to advise our members. There have been too many new policies recently that were rushed without proper consultation," he said. Op Gasak, which runs from May 1 to Oct 31, aims to curb illegal activities such as decanting (transferring gas from subsidised LPG cylinders to non-subsidised ones), smuggling, and the misuse of subsidised LPG by medium and large-scale industrial sectors. Eateries, including hawker stalls, will be required to use the 14kg purple-coloured commercial gas cylinders priced at RM70. On Thursday, however, the government announced that micro and small-scale food and retail businesses may continue using subsidised liquefied petroleum gas (LPG) cylinders without a Scheduled Controlled Goods Permit (PBKB) until October. Domestic Trade and Cost of Living Minister Datuk Armizan Mohd Ali said the exemption would remain in effect throughout the Ops Gasak enforcement period and until amendments to the Control of Supplies (Amendment) Regulations 2021 are finalised.
New Straits Times
06-06-2025
- Business
- New Straits Times
SME group welcomes LPG permit relief but says retail slump persists [WATCH]
KUALA LUMPUR: The government's decision to exempt small traders from enforcement over the use of subsidised LPG cylinders offers some relief but does little to ease the ongoing retail slowdown, says the Small Medium Enterprise (SME) Association of Malaysia. Its president Dr Chin Chee Seong said delays in policy clarity, coupled with mounting operational costs, are putting increased pressure on already vulnerable micro and small businesses. "From day one, this exemption should have been made clear. "Why wait until the issue escalates and becomes political? The government must act faster," said Chin during an interview with NST's Beyond the Headlines. On Thursday, the Cabinet agreed that micro and small-scale food and beverage traders may continue using subsidised LPG cylinders without the need for a Scheduled Controlled Goods Permit (PBKB) until October. The exemption remains in effect throughout the ongoing Op Gasak enforcement period and until amendments to the Control of Supplies (Amendment) Regulations 2021 are finalised. While supporting the move, Dr Chin called for more structured engagement with stakeholders including associations representing hawkers, eateries, and retailers as well as the association. "They should collect proper data from the ground before deciding on such regulations. If both sides understand the rationale — how much gas is used, for example — it can reduce friction and ensure smoother policy implementation," he said. He added that poorly communicated decisions risk being politicised or misunderstood, even if they are not initially intended to target micro traders. He highlighted the challenging economic environment facing small businesses and noted that retail and consumer spending have been declining since the Chinese New Year period. This trend, he said, is expected to be reflected in upcoming reports by the Malaysia Retail Chain Association (MRCA). "At a time when consumer spending is falling and the economy is still in recovery mode, adding more cost pressures or regulatory uncertainty will only make things worse for micro and small businesses," he added. The government has said that findings from Ops Gasak, which targets the misuse of subsidised LPG by medium and large-scale industrial users, will serve as a key reference for reviewing the regulations. Domestic Trade and Cost of Living Minister Datuk Armizan Mohd Ali said a technical committee, chaired by his ministry's secretary-general, will oversee the review and ensure that amendments reflect the specific needs of micro and small-scale food and beverage traders. Dr Chin, however, noted that unless future regulatory changes are grounded in meaningful consultation with those most affected, such issues will continue to stir controversy and erode business confidence.
Yahoo
12-02-2025
- Business
- Yahoo
Malaysian SME association says Trump's tariff plan won't affect them, but steel industry urges govt intervention
The Small Medium Enterprise (SME) Association of Malaysia believes that US President Donald Trump's announcement of tariffs on major US trading partners, including China will not have a considerable impact on SMEs in Malaysia in the short term. Its president Chee Chee Seong said while the latest American policy had caused certain sectors to be concerned about the possible impact, it will not severely affect Malaysia's enterprises which do not export many products to the US. 'Trump has said that if businesses do not set up operations there, tariffs will be imposed. But right now, the SME industry hardly sells much products there,' said Chin. 'Previously, our furniture exports to the US were high, but there has been a sharp decline in recent years, with the focus shifting to other nations.' According to a report last year, the decline of Malaysian furniture in the US market was largely due to continued weak furniture demand as the US housing market continues to be negatively impacted by elevated interest rates, resulting in US housing becoming increasingly unaffordable. The report noted that one of the main reasons Malaysian furniture exports to the US declined significantly in 2023 was because US homebuyers faced an unaffordable housing market due to the US Federal Reserve interest rate hikes. There are some 1.15 million SMEs in Malaysia who contribute over 38 per cent, or more than RM500 billion, to Malaysia's GDP. The sector is a major driver of the nation's economy. Chin said that while the key to avoiding US tariffs was to get businesses to set up bases and operations in America, he believes the target was not Malaysia, but rather, China. 'The US knows that a lot of Chinese companies are setting up bases in Asean countries, including Malaysia and Vietnam, where products are rebadged or rebranded and exported to the US to make it look like they are from Malaysia,' he said. Last December, deputy Investment, Trade and Industry minister Liew Chin Tong urged businesses from China not to 'rebadge' their products in Malaysia, merely to dodge US tariffs. Last week, Malaysia's Prime Minister Datuk Seri Anwar Ibrahim said the country will continue to actively build trade relations with other nations instead of just waiting for the impact of potential US trade tariffs. This morning, the Malaysian Iron and Steel Industry Federation urged the government to reinforce anti-dumping legislation in view of the US' plan to impose a 25 per cent tariff on steel and aluminium imports. In a statement, the federation said while the consequences of the 25 per cent tariffs remain uncertain, it is however expected to accelerate trade diversion, leading to a surge in steel products into the Malaysian market. 'China has used countries such as Canada, Mexico, Brazil, and Vietnam to circumvent US tariffs. In response to this, numerous North and South American countries have implemented their own version of tariffs over the past six months to stop the flood of Chinese steel products into their respective countries. But the damage has been done,' the statement read. This is one of the main reasons why the US removed exemptions and exceptions given to them in the past. With these new tariffs, and with the expansion to downstream goods, this new environment does not make them viable export destinations. Countries like China that previously circumvented tariffs, along with South Korea, Japan, and Vietnam, that obtained exceptions with yearly quotas, will likely be diverting their exports to Malaysia. The federation added that governments in Asean are already taking steps to address the influx, with Vietnam and Indonesia imposing anti-dumping tariffs on Chinese goods. Thailand meanwhile, recently announced measures to monitor cheap imports. It also noted that access into Indonesia, Thailand, and Vietnam, was significantly tightened recently with their respective governments paying close attention to excess steel being dumped into their respective country's domestic steel industry. 'Without immediate and decisive action, Malaysian steel manufacturers will suffer lasting and irreversible damage. We strongly urge the government to take swift action – by reinforcing anti-dumping legislation, expediting investigations, and implementing measures to protect the industry before severe repercussions occur,' the federation added.
