Citizens must not be burdened by enforcement of expanded SST

MCA Youth urges the government to seriously reconsider the manner in which it is implementing the expanded Sales and Services Tax (SST). The confusion we are currently witnessing is not just a matter of poor coordination; it is a matter of public trust and economic fairness.
The government must answer a very simple yet critical question: is the expanded SST enforcement to be based on what is officially written in the Government Gazette, or on verbal explanations given by the Finance Ministry's spokespersons? This lack of clarity is unacceptable in tax policy, especially one that affects the daily cost of living for ordinary Malaysians.

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The Star

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• The Star

REITs maintain steady outlook for this year

PETALING JAYA: Malaysian real estate investment trusts (REITs) delivered first quarter ended March 31, 2025 (1Q25) financial results that were in line with expectations, but softer consumer spending and the expansion of the sales and service tax (SST) may weigh on them in the second half of 2025 (2H25). CIMB Research said all REITs under its coverage – Axis–REIT, Al-Aqar–REIT, IGB-REIT, Sentral-REIT and Sunway-REIT – reported 1Q25 financial results that were in line with expectations, with core net profit growth of 13.3% year-on-year (y-o-y) and 14.2% quarter-on-quarter on an aggregate basis. It said active capital management initiatives were a key driver in the y-o-y earnings growth achieved by Axis-REIT, Sunway-REIT, and IGB-REIT. In contrast, the earnings decline at Sentral-REIT and Al-Aqar was mainly due to the loss of rental income. It has maintained a 'neutral' call on REITs, with the top pick being Axis-REIT for its highest potential upside to target price as well as distribution yields of 5.2% to 5.8% for the financial year ending Dec 31, 2025 (FY25) to FY27. 'In FY24, Axis REIT acquired eight properties for a total consideration of RM719mil, which we estimate contributed 14% to its 1Q25 revenue,' it added. The research house said there were signs of softening consumer spending, as reflected in weaker tenancy sales among retail REITs under its coverage. Sales per sq ft at Sunway-REIT declined 0.4% y-o-y, while IGB-REIT's Mid Valley Megamall recorded a 2% drop in gross monthly income per sq ft. 'This softness emerged despite the festive period falling within 1Q25 and the completion of refurbishment works at both Sunway Pyramid Mall and Mid Valley Megamall's anchor tenant spaces, where outgoing anchor tenants were replaced with a more diversified and higher-yielding tenant mix,' it said. Noting that headwinds were expected for REITs going into 2H25, it said the SST expansion that includes rental services would raise tenant operating costs and limit REITs' rental reversion potential, while also impacting consumer sentiment. A potential increase in electricity tariff would be another hurdle. 'We estimate that the current 12-month forward distribution yield spread against the 10-year Malaysian Government Securities stands at 1.9%, which is marginally above the 10-year historical average of 1.8%,' it said.

New Straits Times

an hour ago

• New Straits Times

Rationalising Fuel Subsidies: A Path Toward Fairness and Fiscal Sustainability

FUEL subsidies have been an integral part of government spending in Malaysia, aimed at keeping fuel prices affordable and ensuring that rising fuel costs do not lead to unjustified increases in the price of goods and services. However, these subsidies have placed a heavy burden on national finances, prompting repeated calls for reform. Rationalisation of fuel subsidies has been widely discussed for years, but implementation has been delayed as the government grapples with the complexities involved. Proposals from various quarters have included setting fuel prices based on engine capacity or household income levels. While these ideas aim for a more targeted and equitable subsidy distribution, they come with significant administrative and logistical challenges. In 2024 Budget, the government allocated RM52.8 billion for subsidies and social assistance. With diesel prices already floated, the total subsidy for RON95 petrol is estimated at RM18–20 billion. As of early June 2025, the pump price for RON95 petrol remains fixed at RM2.05 per litre, subsidised from an estimated market price of RM3.21, amounting to a subsidy of around RM1.16 per litre. Subsidising all consumers regardless of income level or nationality is neither fair nor fiscally sustainable. Wealthier Malaysians (T20 group) and foreigners, notably from Thailand and Singapore, have long benefited from Malaysia's heavily subsidised fuel. While notices at petrol stations indicate that RON95 is strictly for Malaysian-registered vehicles, compliance has been poor due to weak enforcement, allowing this practice to continue unchecked. A more efficient and equitable approach would be to gradually float the price of RON95 petrol and redirect subsidies toward targeted households. The government already possesses extensive data through programs like BR1M, now integrated into the Sumbangan Tunai Rahmah (STR) scheme. This database can be leveraged to identify eligible low- and middle-income households that own vehicles. A practical mechanism would be to offer direct cash assistance, around RM100 to RM150 monthly, to qualified vehicle owners in the B40 and lower M40 categories. This ensures aid is targeted, avoids leakages and simplifies enforcement at petrol stations. With the implementation of digital platforms, e-wallets and MyKad-linked disbursements, direct transfers or redeemable fuel e-vouchers can now be efficiently rolled out. This form of targeted assistance maintains affordability for deserving groups while eliminating the blanket subsidies that benefit those who do not require aid. Meanwhile, the diesel subsidy, recently rationalised, serves as a test case for broader fuel subsidy reform. As of June 10, 2024, the government floated diesel prices in Peninsular Malaysia, setting the retail price at RM3.35 per litre. In Sabah, Sarawak, and Labuan, diesel remains subsidised at RM2.15 per litre for now. This policy is expected to save the government up to RM4 billion annually, but not without side effects. Since the diesel price adjustment, several industries especially logistics, transportation, and retail have reported rising operating costs, translating into higher consumer prices and raising concerns about inflation. Small businesses, particularly those dependent on road transport, have voiced concerns about profit margins and business viability. To mitigate these impacts, the government launched the Budi Madani subsidy programme, providing targeted diesel assistance to commercial vehicle owners, farmers, fishermen and other essential sectors. However, to ensure long-term effectiveness and transparency, this must evolve into a more systematic, tech-driven mechanism. One recommendation is to introduce sector-specific registration and verification, requiring fishermen and vegetable sellers to register under recognised agencies such as the Department of Fisheries and the Farmers' Organisations Authority. Registrants must possess valid trade licences or proof of livelihood from local authorities. Additionally, the use of digital fleet cards or QR-based quota systems, managed by regulatory bodies like APAD, can help track subsidised diesel use. Registered commercial vehicles could receive a monthly quota, with usage monitored electronically and any excess consumption charged at market rates. This ensures transparency, reduces smuggling, and prevents fraudulent claims. Ultimately, rationalising fuel subsidies must be about protecting those in need while reducing unnecessary fiscal leakage. With the right tools and political will, a cleaner, more transparent system can be implemented - one that eases the government's financial burden while ensuring fairness, reducing abuse and promoting responsible fuel consumption. *The writer holds an MBA from the University of Strathclyde in the UK, awarded through the prestigious British Chevening Scholarship. With extensive experience in the financial markets and a robust background in management education, he has also served at a prominent think tank*

Borneo Post

2 hours ago

• Borneo Post

SUPP man calls on DAP leaders to fulfil promises of tackling rising cost of living

(Standing, from fifth left) Wong, Kong and Dr Soon (seated in front of Wong) pose for a photo session during the mobile service. SIBU (June 23): Sarawak United People's Party (SUPP) Central assistant publicity and information secretary Wong Ching Yong reminded Democratic Action Party (DAP) ministers and MPs of their obligation in tackling the rising cost of living. He said they had frequently promised to ease the people's difficulties before assuming power in the federal government but pointed out that not only had DAP failed to fulfil its pre-election promise of reducing prices, they instead contributed to price hikes. 'With the rollout of a series of new policies, particularly the expansion of the Sales and Service Tax (SST), the increase in electricity tariffs in Peninsula and changes in fuel and gas subsidies, another wave of price hikes is expected after July. 'Yet we have not seen any effective countermeasures from Pakatan Harapan (PH) leaders who head key federal ministries, including DAP's deputy Finance Minister Lim Hui Ying, whose performance has been wholly inadequate,' he told a press conference during the SUPP Dudong and Sibu Jaya mobile service at a coffee shop here yesterday. He said with these policies, businesses were expected to raise their prices—severely impacting the public, particularly the B40 group—and the worrying part was that about 97 per cent of products would be affected by the SST, according to the Federation of Malaysian Manufacturers. 'This completely contradicts the federal government's claims that the new tax structure would have minimal impact on low-income groups,' he said. Wong said while Sarawak was protected from the electricity tariff hike due to Gabungan Parti Sarawak's (GPS) governance, its implementation in Peninsula would raise industrial electricity costs which would inevitably be passed on to product prices. He said the fuel subsidy adjustments would have a similar effect, as Sarawak heavily depended on goods imported from the Peninsula and the increased production and transportation costs would drive up prices in local markets. He also highlighted another controversial item included in the tax net, namely imported fruits. 'Although the federal government claims the SST targets luxury imported fruits, the actual list includes apples, oranges, pears, mangoes and dates—which are commonly consumed by the B40 group. 'We must not ignore a key point: Malaysia is highly dependent on imported fruits. Most local fruits are seasonal or lack sufficient production to meet daily market demand. Therefore, the new tax on imported fruits will inevitably lead to price hikes and affect the people's daily nutritional intake.' He said DAP and PH leaders must understand the lower a person's income, the higher the proportion of their income that goes towards paying SST. 'For example, a B40 individual earning RM1,700 a month spends more than 85 per cent of their income on basic needs such as food and transport—all of which are heavily exposed to the new tax. In other words, the supposed fiscal fairness of the new tax could end up legally exploiting vulnerable groups. 'Take the eight per cent SST on the beauty industry as another example. The federal government naively believes this won't impact low-income groups—does this mean in the eyes of DAP ministers that low-income women don't have the right to pursue beauty? Furthermore, the higher costs could create room for unlicensed operators to flourish, posing additional public safety risks,' he stressed. He also brought up the Inland Revenue Board's implementation of the Stamp Duty Audit Framework, which came into effect January 1, 2025. He said employers must ensure employment contracts are stamped and they must self-assess and pay stamp duties. 'While RM10 per contract may seem trivial, if a company has many employees and there is a lack of clarity about the policy leading to delays, the accumulated taxes and fines could become a significant financial burden, especially for private companies already struggling in a weak economy. 'Moreover, stamp duty exemption is only granted for employees earning below RM300 per month—an amount far below Malaysia's current minimum wage of RM1,700. Is this reasonable?' Also present were SUPP Dudong advisor Datuk Dr Soon Choon Teck and SUPP Sibu Jaya chairman Kong Sing Ping.