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Daily Express
08-07-2025
- Business
- Daily Express
Federation of Sabah Industries concerned reforms too much to handle
Published on: Tuesday, July 08, 2025 Published on: Tue, Jul 08, 2025 Text Size: Sylvester said without immediate policy intervention, this will inevitably result in higher operational costs, supply chain disruptions, and increased prices for consumers. Kota Kinabalu: The Federation of Sabah Industries (FSI) voiced concerns over the compounded operational and financial challenges faced by industries following the implementation of several significant regulatory changes in 2025. FSI Treasurer Sylvester Chua stated that the recent expansion of the Sales and Service Tax (SST) scope effective 1 July 2025, combined with the increase in minimum wage to RM1,700, the mandatory e-invoicing rollout for companies with turnover between RM5 million and RM50 million, and the impending 2pc EPF contribution for foreign workers starting October 2025, have collectively imposed a heavy administrative and financial burden on businesses in Sabah. 'Industries are struggling to manage overlapping compliance demands within a compressed implementation timeline. 'The absence of clear, transitional guidelines particularly concerning business-to-business (B2B) exemptions and the application procedures for raw materials and intermediate goods exemptions has led to confusion, operational disruption, and rising compliance costs,' he said. He further noted that in the Sabah context, most raw materials are acquired for the manufacturing of end products. 'Therefore, full exemptions for raw materials, components, intermediate goods, and manufacturing equipment from Sales Tax regardless of the tax status of the finished product are critical. 'Not only would this relieve manufacturers of unnecessary tax-on-tax burdens, but it would also reduce compliance documentation and audit preparation costs, which have now become an added strain on industries already facing higher logistics and infrastructure costs. 'The combined financial impact of wage increases, SST compliance costs, e-invoicing obligations, and the soon-to-be implemented EPF contribution for foreign workers is severely pressuring the viability of manufacturers and SMEs in Sabah,' he warned. Sylvester said without immediate policy intervention, this will inevitably result in higher operational costs, supply chain disruptions, and increased prices for consumers. 'In light of these issues, FSI is committed to raising these concerns directly with the Federal Government on behalf of Sabah's business community. 'The federation urgently appeals to the Prime Minister and the Federal Government to introduce a comprehensive and industry-friendly B2B exemption framework, alongside clear, practical implementation guidelines to support businesses through this challenging period. 'FSI also wishes to commend the Royal Malaysian Customs Department, Sabah for its proactive engagement and support during the early stages of implementation.' However, as Sylvester Chua pointed out, key areas such as B2B exemptions, raw material and products classifications, and exemption application procedures still require urgent clarification and improved administrative processes to avoid further uncertainty and disruptions. 'The Federation of Sabah Industries (FSI) reaffirms its commitment to working closely with authorities and stakeholders to ensure that industrial policies and taxation frameworks are equitable, practical, and responsive to the unique economic conditions and operational realities faced by industries in Sabah,' he said. * Follow us on our official WhatsApp channel and Telegram for breaking news alerts and key updates! * Do you have access to the Daily Express e-paper and online exclusive news? Check out subscription plans available. Stay up-to-date by following Daily Express's Telegram channel. Daily Express Malaysia
Borneo Post
27-06-2025
- Business
- Borneo Post
SST expansion risks burdening Sabah SMEs — FSI
Chua KOTA KINABALU (June 27): The Federation of Sabah Industries (FSI) expresses its concern over the recently announced Sales and Service Tax (SST) scope expansion effective 1st July 2025, cautioning that the move will further burden Sabah's SMEs and increase inflationary pressures within the state. Sabah businesses are already operating in a high-cost environment compared to Peninsular Malaysia, grappling with elevated logistics, operational and infrastructure costs. The introduction of additional SST coverage at this point is expected to escalate the cost of doing business and ultimately be passed down to consumers. 'We welcome the Prime Minister's recent announcement to exempt apples and oranges from Sales Tax, which is a positive move for consumers. However, Sabahan businesses need more time to improve their operational cost structures before additional tax measures are imposed,' said Sylvester Chua, treasurer of the Federation of Sabah Industries and head of FSI's SST Technical Advisory Committee. Chua added that the situation is further complicated by the upcoming implementation of the 2% Employees Provident Fund (EPF) contributions for foreign workers effective October 2025. While recognising it as a good initiative for worker welfare, he warned that it would immediately impact the manufacturing sector's cost management and cash flow position. 'The issue lies in the timing. Sales Tax is liable for payment upon the issuance of invoices, and October and November are critical cash flow months for manufacturers. Implementing SST with no delay alongside new EPF obligations will place serious financial strain on Sabah manufacturers. It's a good initiative — but the timing is wrong,' Chua stressed. In view of these challenges, FSI urges the government to consider postponing the implementation of the SST scope expansion to 1st January 2026, allowing businesses time to adjust and manage their operations more sustainably. Additionally, FSI appeals for Sales Tax exemption on the importation of essential raw materials such as plastic resins, to ease manufacturing costs and reduce extra compliance obligations for SMEs in Sabah. 'We sincerely hope the government will take into account Sabah's unique economic challenges and extend fair transitional measures that support local industries in remaining competitive while adjusting to new tax and labour policies,' Chua concluded.
Daily Express
27-06-2025
- Business
- Daily Express
FSI urges delay in SST expansion over SME cost concerns
Published on: Friday, June 27, 2025 Published on: Fri, Jun 27, 2025 Text Size: KOTA KINABALU: The Federation of Sabah Industries (FSI) has raised concerns over the expanded Sales and Service Tax (SST) scope effective July 1, warning it could burden SMEs and fuel inflation in the state. FSI Treasurer Sylvester Chua ( pic ) said Sabah businesses are already operating under higher costs than those in the peninsula, with the SST expansion likely to increase prices for consumers. While welcoming the Sales Tax exemption on apples and oranges, Chua said local businesses need more time to manage their costs before additional taxes are introduced. He also pointed to the upcoming 2 per cent EPF contribution for foreign workers in October as another pressure point, warning it could strain manufacturers' cash flow during peak operational months. FSI has urged the government to delay the SST expansion to Jan 1, 2026 and consider tax exemptions on essential raw materials to ease the transition for Sabah's SMEs. * Follow us on our official WhatsApp channel and Telegram for breaking news alerts and key updates! * Do you have access to the Daily Express e-paper and online exclusive news? Check out subscription plans available. Stay up-to-date by following Daily Express's Telegram channel. Daily Express Malaysia
