The Malaysian Insight

THE Federation of Malaysian Manufacturers (FMM) has recommended the reduction of sales and services tax (SST) to help alleviate the cost of living for consumers.

For manufacturers, the federation said the government can reduce electricity tariffs for a year to help lower operation costs.

“FMM shares the government’s concern on the need to expedite reduction in the prices of goods and services for consumers.

“As SST is a single stage tax embedded in the final product cost, FMM proposes a reduction in SST by 2% for a 12-month period.

“These suggestions will boost business conditions that will lead to higher investments and employment opportunities as well as higher disposable income for the people,” said FMM president Soh Thian Lai.

However, Deputy Prime Minister Dr Wan Azizah Wan Ismail yesterday had said the economic stimulus package to be announced on February 27 would focus on domestic tourism development.

She had said the government was currently working on the best package to boost the sector, one of those hit by the Covid-19 outbreak in China.

Soh said Putrajaya should grant exemption or relief of sales tax on all inputs for the manufacture of non-taxable goods and certain services.

He added the government should reduce levy payments to the Human Resource Development Fund from 1% to 0.5% for all employers for a year to further support businesses affected by the slowdown in trade and cash flow constraints.

“Banks can also extend payment terms to affected companies by declassified non-performing loans from three months to six months.

“Bank Negara Malaysia can further cut another 50 basis points of the overnight policy rate to cushion any anticipated moderation in economic activities.”

He said to further boost domestic consumption, the government must reduce employees’ contribution to the Employees Provident Fund contributions by three percentage points.

“This will put more cash in the rakyat’s pocket, hence increasing consumer spending that can further stimulate the economy.”

He added that with the anticipated slowdown in the international tourism sector, the government can consider reducing electricity tariffs for malls and eateries that are expected to experience a significant drop in business due to the decline in tourist arrivals.

Prime Minister Dr Mahathir Mohamad is set to announce an economic package to stimulate the local economy on February 27. – February 16, 2020.