PETALING JAYA: There is no other way to stay afloat but to hike prices with the expanded Sales and Service Tax (SST) having kicked in, industry players and various business chambers have maintained.

The food and beverage industry will be among the first to increase prices, with retail space also to see a rise in rentals.

Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) president Datuk Ng Yih Pyng said depending on the inventory, businesses will have to pay higher sales tax for replenishment of stocks. 

“When they do this, they may have to pass on to consumers for goods and services that are subjected to SST. 

“Businesses will have to deal with multiple cost increases in the operating environment by managing cost efficiently.

“We have requested a higher registration threshold and exemption threshold for tenanted SMEs under rental and leasing services,” said Ng.

SME Association of Malaysia president Chin Chee Seong said price increases will be obvious in a month’s time when F&B retailers start feeling the big pinch. 

“Some have said that they will look out for the first three months but they, too, will have to make adjustments soon after.

“If you are selling apparel, it will take time for the SST increase to be felt but for F&B, they will have to make adjustments very quickly,” he added.

Chin said the association might help out by negotiating with shopping malls to reduce rentals of the F&B outlets.

“Many other products will also see an increase in prices due to factors other than the SST; for example, the electricity tariff hike. 

“The SST for rental and leasing will for now be the main factor for increases in prices of products and services,” he added. 

The annual sales threshold for mandatory SST registration has been raised from RM500,000 to RM1mil for leasing, rental and financial services.

However, Mydin Mohamed Holdings Bhd managing director Datuk Ameer Ali Mydin said despite the increase in the threshold, it was not much when further calculations were made daily and monthly.

“The threshold is still low and may even affect small traders such as those operating kiosks in the malls. The owners usually have more than just one kiosk.

“When shopping malls have to pay 8% extra in rental due to SST to landlords, as much as we would like to say we want to be gracious, at the end of the day we will pass that increment to our tenants,” he added. 

Ameer said these small traders will then be faced with a triple whammy – rental increase, extra costs for food ingredients and if they employed foreign workers, the newly-imposed EPF contributions. 

“There are just too many sudden increases being implemented at the same time,” he added.

Malay Businessmen and Industrialists Association of Malaysia (Perdasama) president Mohd Azamanizam Baharon said that with rising costs, many micro, small and medium-sized enterprises (MSMEs) have no choice but to pass on the burden to consumers through price increases. 

“This could weaken the competitiveness of local entrepreneurs, mainly in the retail and service sectors.

“The association’s 27,000 members have also raised concerns regarding tax compliance and management. 

“Many MSME business owners still lack robust accounting or digital systems. This policy change will require new understanding and may lead to unintended compliance errors, increasing the risk of penalties.

“This is particularly true for members in rural areas who have not received sufficient information on the changes. The latest technical information and guidelines are not yet fully understood,” he added.

Azamanizam proposes that the government provides temporary tax incentives or rebates for MSMEs to help them adjust.

“We also recommend introducing free or subsidised software for SST compliance and accounting management for small business owners,” he added.

Sarawak Federation of Chinese Associations president Datuk Richard Wee said the increase in the SST has two parts which needed to be studied.

“One is the expansion of the goods and services to be included and the other being the impact of the increase from 6% to 8%. 

“The increase of 6% to 8% is being felt by industries and the community as prices have  been adjusted across the board in all the affected goods and services. This impacts the community and economy as a whole. 

“The other aspect is the expansion to include more sectors in the new list. We have not experienced any impact yet as it has only just come into force,” he added.