ZCZC
BCN-31
MALAYSIA-CONSUMER-SST
Malaysian positive consumer sentiment expects to continue with
reintroduction of SST
KUALA LUMPUR, Aug. 11, 2018 (BSS/Xinhua) – Malaysia’s strong consumer
sentiment is expected to continue, despite the return of Sales and Services
Tax (SST) next month, says a Malaysian research house on Friday.
MIDF Research said in a report, it sees the new SST a strong structural
factor to lift the country’s consumer sentiment and spending power, which may
drive spending on consumer discretionary items beyond the temporary demand
volatility during the transition from the Goods and Services tax (GST) to
SST.
The Malaysian parliament passed several bills this week to repeal GST and
introduce a new form of SST. The SST will be implemented in September.
MIDF highlighted, the re-implementation of SST will not deter domestic
consumption in Malaysia, because as compared to GST, SST does not affect
consumers directly, but via manufacturer and service provider.
“Prices of consumer staples in general will not be significantly different
under SST as prices are more subjected to market forces. Hence, we expect
spending on these goods to be stable,” it said.
It also projects solid economic fundamentals in the Malaysian economy
particularly stable labor market, moderating inflationary pressure and upbeat
industrial activity will continue to support the domestic demand.
According to Malaysian Finance Ministry, the new SST is only taxable on 38
percent of consumer goods and 43.5 percent of services, as compared to the 60
percent and 64.8 percent under GST.
Following a stunning election win in May, the Malaysian government zero-
rated the GST. The first month of zero-rated GST saw the country’s headline
inflation tumbled to 40-month low at 0.8 percent.
The change in political landscape and zero-rated GST has also pushed the
country’s consumer sentiment index (CSI) to a 21-year high of 132.9 points,
according to the Malaysian Institute of Economic Research (MIER).
BSS/XINHUA/HR/1215