Archive for the ‘Consumerism’ Category

A ticking time bomb

Sunday, September 23rd, 2018
Turkey is still struggling to stabilise its lira. AFP PIC

GEORGE Soros, Bill Gates and other pundits have been predicting another financial crisis.

In their recent book, Revolution Required: The Ticking Bombs of the G7 Model, Peter Dittus and Herve Hamoun, former senior officials of the Bank of International Settlements, warned of “ticking time bombs” in the global financial system waiting to explode, mainly due to the policies of major developed countries.

Recent events vindicate such fears. Many emerging market currencies have come under considerable pressure, with the Indonesian rupiah, Indian rupee and South African rand all struggling since early this year. Brazilian real fell sharply in June, and Argentina has failed to stabilise its peso despite seeking International Monetary Fund (IMF) aid. As Turkey struggles to stabilise its lira, many European banks’ exposure has heightened fears of another global financial crisis.

Why the vulnerability?

Some fundamental weaknesses are at the core of this vulnerability. These include the international financial “non-system” since the collapse of the Bretton Woods system in 1971, and continuing to use the United States dollar as the main international reserve currency.

This burdens deficit countries vis-à-vis surplus countries and ensures near-universal vulnerability to the US monetary policy. Thus, most countries accumulate dollars as a precaution, that is, for “protection”, eschewing other options, such as investing in socially desirable projects.

Policymakers not only failed to address these weaknesses following the 2008-2009 global financial crisis (GFC), but also compounded other problems. Having eschewed stronger, more sustained fiscal policy interventions, monetary policy virtually became the sole policy instrument. Major central banks, led by the US Federal Reserve, embarked on “unconventional monetary policies”, pushing real interest rates down, even into negative territory.

Emerging and developing economies (EDEs) offering higher returns temporarily experienced large short-term capital inflows. The external debt of emerging market economies has grown to over US$40 trillion (RM165.6 trillion) since the GFC. The combined debt of 26 large emerging markets rose from 148 per cent of gross domestic product (GDP) at the end of 2008 to 211 per cent in September last year, according to the Institute of International Finance (IIF).

Easy money raised household and corporate debt, fuelling property and financial asset price bubbles. According to IMF April 2018 Fiscal Monitor, global debt peaked at US$164 trillion in 2016, or 225 per cent of global GDP, compared with 125 per cent before the GFC. The IIF reported that global debt rose to over US$247 trillion in early 2018, that is, equivalent to 318 per cent of GDP.

Rising debt levels pose serious downside risks for the global economy. With easy money coming to an end, as the Fed continues to “normalise” monetary policy by raising the policy interest rate, capital flight to the US is undermining emerging market currencies. When debt defaults increase with interest rates while income growth remains subdued, the world becomes more vulnerable to financial crisis.

Both developed and developing countries have less policy space than during the GFC. Most governments are saddled with more debt following massive financial bail outs followed by abandonment of efforts to sustain robust recovery.

According to the IMF’s April 2018 Fiscal Monitor, average public debt of advanced economies was 105 per cent of GDP in 2017, constraining fiscal capacity to respond to crisis. Meanwhile, monetary policy options are exhausted after a decade of “unconventional” monetary policies.

General government debt-to-GDP ratios in emerging market and middle-income economies almost reached 50 per cent in 2017 — a level only seen during the 1980s’ debt crisis. The 2017 ratio exceeded 40 per cent in low-income developing countries, climbing by more than 10 percentage points since 2012.

Playing With Fire by Yilmaz Akyuz, former South Centre chief economist, has highlighted the self-inflicted vulnerabilities of developing countries. Public debt-GDP ratios in EDEs are likely to rise due to falling commodity prices and stagnant global trade, while they have almost no monetary policy independence due to deeper global financial integration.

While corporate sectors have been busy with mergers, acquisitions and share buybacks with cheap credit, instead of investing in the real economy, the financial sector has successfully portrayed sovereign debt as “public enemy number one”.

Held hostage to finance capital, governments around the world have wasted the opportunity to improve productive capacities by investing in infrastructure and social goods when real interest rates were at historic lows. At around 24 per cent of global GDP, the global investment rate remains below the pre-crisis level of around 27 per cent, with investment rates in EDEs either declining or stagnant since 2010.

Failure to address the falling wages’ share of GDP, rising executive pay and asset price bubbles, due to “easy” monetary policy, have continued to worsen growing income inequality and wealth concentration. Meanwhile, deep cuts in government spending and public services, while reducing top tax rates, cause anger and resentment, often blamed on “the other”, contributing to the spread of “ethno-populism”.

In turn, growing inequality limits aggregate demand, which has been maintained by unsustainably raising household debt, that is, perverse “financial inclusion”.

Turbulence in currency markets is due to developing countries’ limited economic policy space. A decade after the GFC, developing countries still experience lower growth and investment rates.

Financial sectors of emerging market economies now have more and deeper links with international financial markets, also reflected in high foreign ownership of stocks and government bonds, with large sudden capital outflows causing financial crises.

By ANIS CHOWDHURYJomo Kwame Sundaram.

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‘SST’s impact on prices of goods not significant’

Tuesday, September 18th, 2018
(Stock image for illustration purposes) “The SST caused some of the prices of items to go up, but it depends on the type of goods and services.”

KUALA LUMPUR: Kuala Lumpur Hawkers and Petty Traders Association (KLHPTA) said the implementation of the Sales and Service Tax (SST) has no significant impact on prices of goods sold by hawkers and traders.

KLHPTA chairman Datuk Ang Say Tee said the change of taxation also did not cause a sharp rise or fall of prices.

“The SST caused some of the prices of items to go up, but it depends on the type of goods and services

“The impact of (SST) is not so significant to the hawkers’ and traders’ businesses,” he said at a press conference on the Mid-Autumn Festival at Central Market here today.

He also acknowledged that through SST, the profit generated by traders and petty hawkers was not as big as during the implementation of the Goods and Services Tax (GST) system.

Ang said, however, that hawkers and traders were more burdened with the Ringgit currency drop and the new minimum wage had yet to be implemented.

“As the minimum wage level has remained unchanged, and with the implementation of the tax system, the people’s purchasing power has become weaker and this impacts sales revenue,” he told reporters after announcing the annual Mid-Autumn Festival programme which would be held on Sept 22 in collaboration with Central Market.

By Amira Eizan AzmanZarul Fitri Muhd Zamrie.

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2019 Budget offers chance for reform: experts

Monday, September 10th, 2018
PH likely to boost spending efficiency, focus on people’s welfare, say experts. (File pix)

ECONOMISTS and market observers say the 2019 Budget, the first under the Pakatan Harapan (PH) government, presents an opportunity for an overhaul and reform of the economy.

Scheduled for tabling in Parliament on Nov 2, the budget would likely be less than the RM280.25 billion “mother of all budgets” tabled last year by Datuk Seri Najib Razak.

Prime Minister Tun Dr Mahathir Mohamad had said the 2019 Budget would entail many sacrifices as the government grappled with reducing more than RM1 trillion in debts and liabilities it inherited from the previous administration.

“This budget is of sacrifice, everyone will have to sacrifice,” he said in an interview published yesterday.

“We can’t spend more than our earnings. We can’t entertain all sorts of requests. We have to accept that we must sacrifice.”

Responding to Dr Mahathir’s comments, Asian Strategy and Leadership Institute’s Centre of Public Policy Studies chairman Tan Sri Ramon V. Navaratnam said Malaysians must “cut a coat according to one’s cloth”.

“Squeezing the budget is good only if and when you squeeze it in the right places. The strategy should be to do more for the poor and incentivise the rich to boost the economy and generate employment quantitatively and qualitatively,” he told NST Business.

Ramon said monopolies, protective policies and race-based programmes should be reduced, if not removed altogether, albeit in stages.

“We need more competition, meritocracy and higher productivity that can be incentivised through more modern, updated and enlightened fiscal and monetary policies, and practices that are balanced and more equitable.”

Ramon said instead of mild fiscal adjustments and tinkering with the system, this year’s budget initiatives should go all out against corruption, wastage and cronyism.

“The government must focus on the poor regardless of race. The rich should not be pampered but encouraged to do better via more liberal policies.”

Ramon said income inequality was a serious issue in Malaysia, made worse by rising inflation.

Sunway University Business School economics Professor Dr Yeah Kim Leng said the likely lower 2019 Budget was in line with lower-than-expected revenue due to the change from the Goods and Services Tax (GST) to the Sales Tax and Services Tax (SST).

He said one of the key challenges included how the government could increase its spending efficiency, delivering the same quality of services with a lower budget.

“This can be achieved by reducing wastages and leakages.”

Yeah said to meet the people’s expectation — in terms of cost of living, including welfare and economic support — the government would likely prioritise social and economic sectors.

“Spending on social programmes, such as education, healthcare and support for the low-income group, will continue to be the priority.”

The government has reviewed some mega infrastructure projects since taking over.

He said the government should look at how to enhance the workforce’s productivity and ability to increase wages to reduce the inflationary pressure in property, education and healthcare.

AmBank group chief economist and head of research Dr Anthony Dass said the 2019 Budget adjustment would likely be about optimising expenditure and reprioritising investments.

“This can lower public debt and balance the fiscal book.

“The government will need to optimise its expenditure by focusing on priority projects or
investments that trickle down positively to the market and people.”

He said there would be limited room for incentives in the form of tax cuts for both households
and businesses, probably some indirect tax incentives for the middle income and below households.

“To lower the high operating expenditure compared with
development expenditure, among the key areas will be strong enforcement, which will reduce leakages and bribery, and put a cap on discretionary spending.

“The need to work closely with the private sector is vital in creating more jobs for Malaysians. Focus on foreign direct investments should be on those who can bring in more value-added investments. There should not be special privileges for specific countries.”

MIDF Research chief economist Dr Kamaruddin Mohd Nor said people-related projects would likely be prioritised.

“Targeted programmes to address and improve the wellbeing of B40 and M40 groups will continue to be implemented.”

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What public wants from doctors

Wednesday, September 5th, 2018

Doctors must be held accountable for every action they do or not do, and for every advice given or not given. REUTERS PIC
By DR JOHN TEO - September 5, 2018 @ 9:20am

THE public wants doctors to be well trained so that they can make quick diagnosis, give the right advice and start treatment to cure them instantly.

They want doctors to train in prestigious institutions for five to six years, at a cost of at least RM1 million, if not more.

They want the universities training doctors to be staffed with the best, most experienced and knowledgeable professors and lecturers, and equipped with the best teaching hospitals and facilities.

After all, they are going to be the future of our medical profession and backbone of the healthcare system.

For good measure, they also want the brightest students to enter the medical faculty — those with all 9A+s and above, and they want them to be passionate about healing and helping others. No half-baked students doing medicine — we definitely cannot have that!

Once the students graduate, the public wants them to have all the experience that they can get, be taught by the most senior doctors and be exposed to the most complex of patients’ problems and how to manage them.

They want them to work long hours, see patients all the time, meet all types of patients and gain as much experience as possible during at least two years of housemanship, if not more.

At the end of every posting, they must have assessment to ensure they are well trained and taught, if not they will be retained.

After that, they must do medical officer postings, some in major hospitals and others in districts for at least another three to four years — all this so they can be competent and safe doctors, or go through the Family Medicine programme and rotate with other doctors on major postings for another five years. Additionally, it would be five years, with medical examinations, to be a good and qualified doctor.

Once in private practice and on their own after more than 10 years of training, at least, and deemed safe and competent, the public wants these doctors to help the community.

They want them to be ethical, provide the best of services and facilities, and be available at all times. For that, they demand 24- hour clinics, and doctors be available in the clinic at all hours and contacted by phone, WhatsApp or Telegram to answer patients’ queries. And the hours can be during lunch or dinner, or even bedtime — any time the patient feels worried or when something is troubling them.

To top it off, they want these consultations to be free. Sometimes, they even ask on behalf of their friends or relatives.

For good measure, they slap 33 laws and any other imaginable regulations on doctors and their clinics and make sure they are perfect, and send enforcement personnel to check on them so that doctors do not stray even 1mm off their mark.

They also want to make sure every clinic is up to mark with impeccable services and standard operating procedures are strictly adhered to.

And if these are not dutifully adhered to, we slap them with a heavy fine or even send them to jail. This is indeed a serious profession and we hold them to the highest standards.

Sometimes, we even sue them for millions of ringgit if we feel that we have suffered much.

After all, we are talking about healthcare here — someone’s life, someone’s livelihood and someone’s future. Doctors must be held accountable for every action they do or not do, and for every advice given or not given.

Finally, of course, for all these, their fees must be affordable as healthcare is a right. So, RM10 to RM15 per consultation is reasonable and, of course, only if there is medicine prescribed.


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Shellfish, salted fish are exempted from SST

Tuesday, September 4th, 2018

PUTRAJAYA: Seafood categorised as crustaceans and molluscs are exempted from the 10 per cent Sales and Services Tax (SST) effective immediately, said Finance Minister Lim Guan Eng.

He said raw ingredients that came under the two categories included shrimps, lobsters, squids, oysters, scallops, clams, cockles, ark shells, mussels and abalones.

The exemption was made following complaints from the public that questioned why a 10 per cent SST was imposed on foods not considered as luxury items such as shrimps, crabs and prawns.

“These items were taxed at 10 per cent as they were lumped together with premium seafood such as abalones,” he told a media conference here on Monday.

Lim said he had directed the Customs Department to exempt immediately these seafood items.

“I thought the list only included premium items but apparently, there were also non-luxury ingredients that are used in nasi kandar and char kuey teow,” he said, quipping that the two local dishes were among his favourites.

Lim said although the exemption also covered luxury items such as abalones, a review of the list would be carried out from time to time until year-end.

“We will see whether we will remove (abalones) and impose SST on abalones and other items. For the time being, let’s do a one-shot (exemption of all products under the categories),” he explained.

Customs Deputy Director-General Datuk Paddy Abdul Halim, who was present at the media conference, said a gazette had been issued in relation to the Sales Tax (Rates of Tax) Order 2018 and Sales Tax (Goods Exempted From Tax) Order 2018.

He said “Guide on Proposed Sales Tax Rates for Various Goods” uploaded to the portal had a list of 3,564 goods as a point of reference for consumers and industries.

“However, it is not an exhaustive list on goods that are taxed and tax-exempted. The guide comprises only common consumer goods,” he noted.

Paddy said the guide would be updated from time to time and would be replaced with “Guide on Sales Tax Rates for Various Goods” according to the laws and orders gazetted.

He also conveyed the Customs Department’s apology on the issue of salted fish and admitted the department had overlooked the exemption of the products from the 10 per cent SST as directed by Lim.

“The department apologises for the mistake and will issue an exemption order immediately as instructed. Traders are requested not to collect SST for salted fish,” Paddy said.


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All smooth sailing as SST commences

Sunday, September 2nd, 2018
Going’s good: A sign displaying the implementation of SST at a supermarket.

Going’s good: A sign displaying the implementation of SST at a supermarket.

PETALING JAYA: It was a smooth transition on the first day of the Sales and Service Tax making a comeback, with no major changes in the prices of goods and essential items.

Businesses faced no problems switching their systems to affect the SST, which was implemented after a three-month tax holiday declared by the Pakatan Harapan government.

The new government zero-rated the Goods and Services Tax on June 1.

Most of the supermarkets and restaurants maintained their prices yesterday as they were using old stocks obtained during the tax holiday.

Thillai Govindrajin, 40, who works in the logistics sector, said he did not feel the change in prices but hoped that the authorities would be transparent and show if there was any difference in prices for items sold in supermarkets.

“It will be easier for consumers to see if there is any difference. However, we understand that it takes a bit of time to switch over to the new system.

“We hope that the prices of goods will not go up too much,” he said here yesterday.

Muji Khan, a supermarket supervisor in Taman Tun Dr Ismail, said the outlet would maintain the prices of its products because it had yet to receive any notice from its headquarters to revise the pricing.

“We are still waiting for further information from suppliers on the new prices.

“At the moment, we are using the same price,” he said.

Malaysian Retail Chain Association president Datuk Gary Chua said it did not receive any complaints from members and the switchover to the new system had been relatively glitch-free.

“It is just a simple switch back to the old system, so there is no issue. Unlike GST, we had to do a lot of monitoring and some of us even needed more manpower. It also cost a bit more due to the software change,” he said.

Federation of Malaysian Consumers Associations deputy president Mohd Yusof Abdul Rahman urged consumers to arm themselves with information on the market prices so they could make smart choices.

“If they feel they are cheated, please lodge a report with the relevant bodies,” he said.

Customs Department director-general Datuk Seri Subromaniam Tholasy said in general the transition had been smooth across all sectors.

“For the import side, it went smoothly because we had updated the system at midnight from the zero-rated GST to SST.

His department, he added, would embark on Ops Bimbing to educate business operators on the compliance with the new ruling, instead of going hard on them.

“There will be no hard enforcement, just visits to advise them so they understand the system and can transition smoothly,” he said.

In Penang, Sunshine Wholesale Mart Sdn Bhd retail operations director Yee Kam Ming said its stores still sold goods at zero-rated GST prices pending quotations from manufacturers.

“We are still awaiting the latest prices from manufacturers and selling our present stocks at the old prices.

“By the end of this month, we should know the new pricing and adjust accordingly,” he said.

By Rahimy Rahim
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SST gets Agong’s nod for Sept 1 kickoff

Sunday, September 2nd, 2018
The implementation of Sales and Services Tax (SST) will take place on Sept 1.

KUALA LUMPUR: The implementation of Sales and Services Tax (SST) has been approved by the Yang di-Pertuan Agong Sultan Muhammad V, thus allowing the new tax system to take place on Sept 1.

In expressing gratitude to the ruler, Finance Minister Lim Guan Eng said the implementation of SST was in line with the Pakatan Harapan (PH) government’s manifesto as pledged in the 14th general election.

It was reported that SST would affect 70,000 businesses, as opposed to 420,000 under the now-repealed Goods and Services Tax (GST).

The SST will see its rate set at 10 per cent for sales and 6 per cent for services.

“After it (Sales Tax Bill 2018 and the Services Tax Bill 2018) was passed in the Dewan Rakyat on Aug 9 and by the Dewan Negara on Aug 20, the Yang di-Pertuan Agong on Aug 24 has given his approval on the implementation of SST.


“This means that the SST can be enforced beginning Sept 1, to replace GST which has been repealed.

“The Finance Ministry would like to express its gratitude to the Yang di-Pertuan Agong over his approval to implement SST, which is in-line with PH’s commitment in fulfilling its election manifesto,” Lim said in a statement today.

Lim said was hoped that the implementation of SST, to be gazetted before Aug 30, would ease the people’s cost of living as the government was expected to collect only RM21 billion, as opposed to RM44 billion under the GST.

He reminded that business operators to adhere to regulations and register their businesses under the new tax system.

“This (registration) is to ensure that none of the operators would take advantage (to profiteer) and part of the government’s move to stem hikes in the price of goods which can burden the people

By Syed Umar Ariff and Ahmad Suhael Adnan.

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Food for thought

Saturday, August 25th, 2018
About 8,000 tonnes of the food wasted daily in Malaysia is avoidable food waste. FILE PIC

Food waste is a bigger problem than many people realise.

HAVE you, like me, ever wondered why many Malaysians don’t finish the food on their table when they eat out?

Never mind the fact that most would never clean up after their meals, finished or unfinished (just go to any of the food courts near you, and you will know what I mean).

Malaysia evidently has a long way to go in many areas, especially etiquette and sustainability.

But we cannot afford to slack off anymore, as the implications of not minding issues of food wastage run deep.

Statistics tallied by SWCorp Malaysia show that Malaysians generally produce 38,000 tonnes of waste per day, and from the pile, about 15,000 tonnes make up food waste.

About 8,000 tonnes, or 60 per cent, of the food wasted daily is avoidable food waste (which refers to disposal of edible food such bread crusts, juice pulps etc).

If you think that’s not alarming enough to get you questioning your habits, think again: of the 8,000 tonnes, about 3,000 tonnes is actually still edible. Rationed well and proportionately, the amount could feed approximately two million people.

Folks, that’s more than the size of Kuala Lumpur’s population.

Somehow, these jaw-dropping findings have not stopped many people from rethinking their food purchasing and eating habits, as it’s easier instead to complain about expenses.

But would they consider the fact that perhaps their thinning wallets are due to compulsive buying and very much mindless ways of eating?

That Malaysians spend a quarter of their income on food and beverages alone says as much.

Reports have also shown that we pile about 450g of food on our plates, yet we dare wonder why Malaysia is ranked as the country with the highest cases of diabetes and obesity in all of Asia.

With our perception limited to only our linear observation of day-to-day routines and happenstance, it’s easy to assume that our actions do not have consequences.

But when it comes to food wastage, out of sight is not out of mind.

We may think nothing of the unfinished buns and rice on our lunch plates, or the vegetables rotting away in our fridges, but their ultimate disposal has serious consequences on our environment.

For one, we are steadily running out of landfill spaces on which our wastes are deposited.

Then, there’s also the fact that the daily waste our bin amounts to a bill of approximate RM225; this translates to RM2,700 a year, which is more than a month’s salary for many.

Blind to the socio-environmental gaps that our own overconsumption generates, we don’t think twice of footing up to RM40 billion for imported food.

With more than five million tonnes of food disposed yearly, so it’s rather apt to say that we Malaysians are active contributors to the global statistics of 1.50 billion tonnes of waste generated per year.

Don’t believe me? Just look at the global poll: Malaysia’s food wastage rate is the third highest in the world, after the United Kingdom and Germany.

On an individual level, people must know that wasting food is not okay, as it indicates one’s lack of self-awareness, moral conscience, and respect for one’s surroundings.

When we waste food, we disrespect other people.

Picture ourselves as the poor and needy: how great would we as the starved and impoverished feel when we see others more privileged than us wasting away the energy supply and nutrition that we could have received?

When we buy more produces for our house and order more dishes at the restaurant than we actually need at every given time, we are also really just setting them up as markers for increased carbon footprint and environmental pollution.

The overall solution to food wastage, and ultimately socio-environmental problems, must be a multi-pronged approach.

True change can only take place with the occurrence of the following scenarios:

WHEN people start to realise they can and should examine why they like to waste;

WHEN society (made up of said people) starts to appreciate nature and the physical, mental, spiritual and emotional benefits it provides, enough to want to preserve it; and,

AND sustainable channels for diverting food waste from limited landfills are opened.

Tighter legal enforcements against commercial food wastage and excessive organic disposals should first be implemented to have immediate effect.

We only need to look up to fellow offender, Germany, to take heed: in owning up to its problem, the German government released an official law entailing that individuals who do not finish their food will be fined on the spot.

People are quicker to realise the immediacy of an issue when they are made vulnerable to financial-legal sanctions, but of course, slapping fines onto
civilians is not sustainable on its own.

Corporations and brands across the food industry would also do well to perform as much environmentally focused corporate social responsibility efforts as possible, to tap into people’s awareness.


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Health Minister: Stricter enforcement of cosmetics, aesthetics services.

Monday, August 20th, 2018

PUTRAJAYA (Bernama): The Health Ministry is increasing enforcement of aesthetics and cosmetics therapy services to curb illegal beauty services, said its Minister Dr Dzulkefly Ahmad.

He said action will be taken under the Private Healthcare Facilities and Services Act 1998 (Act 586) against centres which offer the services of uncertified medical practitioners.

“Enforcement and monitoring are very important. Each time there is a complaint, we will take action and hand it to the relevant parties to take action.

“You are responsible for knowing where you go (for treatment). Do not wait until damage or injury to be done and then you blame other people,” he said in a press conference held after the ministry’s monthly gathering here on Monday (Aug 20).

According to the report, the RM200-procedure was conducted by a girl who claimed to have worked as a nurse in a hospital in Jalan Tun Razak.

Dr Dzulkefly said for now, there was no need to amend any laws as they were sufficient to curb false beauty experts.

“The current laws and allocations are good and complete, I am now looking at the implementation.

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Tax exemption on instrastate flights welcomed – MATTA

Monday, August 20th, 2018

Datuk Tan Kok Liang

KOTA KINABALU: The Malaysian Association of Tour and Travel Agents (MATTA) welcomes the federal government’s announcement on exemption of Sales and Services Tax (SST) next month for all intrastate flights in Sabah and Sarawak.

MATTA President Datuk Tan Kok Liang said that while it did not fulfill their request for a full exemption on domestic flights, it was good news for the Borneon states.

Tan when contacted yesterday pointed out that MATTA initially requested for full exemption on domestic flights when the the SST is implemented.

“Under the GST regime, service tax was imposed on intrastate flights… with this announcement at least there is some improvement as domestic flights are essential mode of transport in Sabah and Sarawak,” he stressed.

Tan last week said that “the Frequently Asked Questions (FAQ) in the Royal Malaysian Customs Department’s website state that domestic flights on or after 1st September 2018 are subjected to a 6 per cent service tax. Under the previous Tax Model, domestic flights were outscoped to service tax.”

MATTA, he said appealed to the Ministry of Finance for all domestic air tickets be exempted from service tax and the government could collect much more SST from higher spending on other goods and services.”

Exempting service tax on all domestic air tickets is to ensure other states in Malaysia will also appeal to tourists as holiday destinations, he was quoted as saying.

“As of now, tourists especially bound for East Malaysia are complaining of high air fares from Kuala Lumpur. How are we to develop smaller towns and states apart from Kuala Lumpur as tourism hubs?

“Unfortunately, the high costs of air travel especially between the Peninsular and East Malaysia have driven Malaysians to opt for regional travel instead of local holidays.

Adding six per cent service tax on domestic flights would be a disincentive for ‘flying local’,” he said.

Tan added, “Service tax exemption on all domestic air tickets would benefit the state’s and the country’s economy. Domestic tourism is one of the key anchors in the tourism industry and expected to continue its growth trajectory with inbound tourism receipts amounted to RM82.1 billion last year, and domestic tourism RM83.1 billion.”

“The resulting multiplier effects of the service tax exemption would inevitably add to government revenues through enlarged economic activities especially from visits between the Peninsular and Sabah and Sarawak seeking employment, education, medical needs and family commitments.

Furthermore, air transportation for many East Malaysians is considered a necessity in view of its geographical landscape and the lack of adequate land transportation.”

On Saturday, Finance Minister Lim Guan Eng in announcing the exemption said it was given as most of the time air travel was the only practical option for travelling between cities in the two states.

“This will only work if you are flying from, say, Kuching to Bintulu or Miri, or from Kota Kinabalu to Tawau. But not from Kota Kinabalu to Kuching. Then you will still be taxed under SST,” he said.

He said no such exemption would be given for flights in Peninsular Malaysia, due to the relatively short travel distance between cities in a state.

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