In a few days it will be one year since the implementation of the Goods and Services Tax. Although the GST has been widely unpopular, many economists consider GST as the most efficient way of widening Malaysia’s tax base. Currently, almost everyone pay taxes.
The Malaysia Consumers Movements commend the Ministry of Domestic Trade, Cooperatives and Consumerism and the Royal Customs Department, who have worked extremely hard in curbing profiteering activity and ensuring that price increases were not excessive. Enforcement officers have acted promptly on complaints lodged against unethical businesses for unfairly increasing prices, while prosecuting a few for related offences.
The Customs Department has reportedly collected RM51 billion since April last year, as compared to only RM37.2 billion before the GST.
It is therefore clear that the GST has indeed provided a lifeline to the government but this has come at an expense. Consumers today are grappling with high cost of living issues while business complain of high cost of operating, forcing consumers to tighten their belt and businesses to retrench staff.
It is important to note that the amount of taxes collected through GST will be highly dependent on the strength of domestic private consumption, which is influenced by consumer confidence in the economy.
According to industry report compiled by the Retail Group Malaysia, Malaysian retailers are not too optimistic on the growth for the sector in the first quarter of 2016 and expect a negative year-on-year growth of 0.4%. Consumers are fearful of high prices and are increasingly reluctant to spend.
Bank Negara in its report has projected 4.0-4.5% growth rate in 2016, compared with 5% last year. The Statistics Department indicated that the consumer price index in February rose to a seven-year high at 4.2% from a year earlier. The inflation rate is highest since December 2008 when it hit 4.4%. This rise was attributed to higher costs for food and consumer goods.
These not very convincing statistics calls for us to review, rethink and refine solutions for riding the projected storm ahead.
1. Stop the Bickering
Negative news will have an impact on consumer and investor confidence. What we say and do backfires on us in negatively portraying our country’s image. We must collectively demonstrate political stability, a key factor for investors and consumers. Malaysia practices parliamentary democracy where leaders are elected every 5 years. It therefore ignites sheer concerns when attempts are made to dislodge sitting elected government by force. Street demonstration is not our culture, and it shouldn’t be!
2. Corruption is Detrimental
The government must demonstrate political and administrative will when implementing austerity measures and fighting corruption. There is a big time need to plug leakages and tackle corruption. The recent report of misappropriation totalling RM107 million by a senior government official surely sends a wrong message to consumers. Questions surface if there are more of such cases?
3. Promote Healthy Competition
It is important for the government to promote competition and speed up further liberalisation of key economic sectors. Monopolies are detrimental and must be dismantled as it harms consumers. There is a need to reassess the approved permit policy. Improve business efficiency by eliminating bureaucratic red tape which significantly increases cost of doing business.
4. Transparency in Action
Implementation of policies must be openly deliberated. Stakeholders at all levels must be consulted and their expectations adequately managed. Unilateral decisions must be stopped immediately. The era of government knows best is over. The point being, whenever there is any price revision announcement, it distorts cost elements throughout the supply chain, and more often than not, negatively impacting consumers.
5. Halt Price Increments
The government and businesses must pledge not announce any more price increases. Consumers are still grappling to deal with what was announced in 2015 and any new increases will definitely not be of any help.
6. Ethical Trade Practices
Businesses must demonstrate integrity in action across the value chain. Profit should not be derived at the expense of consumer suffering. Business leaders must uphold high standards of social responsibility which must go beyond mere CSR or brand-building gimmicks. There is only so much that the government can do to audit. Businesses must own up!
7. Prudent Consumption Patterns
Consumers should re-examine our consumption patterns and make adjustments. The era of cheap goods and services is over. Malaysia practices a competitive open market economy and it is therefore unfair to completely shift blame on the government for failing to reduce prices.
We must avoid wastage and over-consumption, where we purchase things.
8. Ramp Up Enforcement
It is commendable that the ministry has done very well in monitoring, tracking and acting against errant businesses which unfairly raise prices. But why only expect the regulators to do the auditing. In the era of social media, we are all empowered to highlight real time issues and ensure they are addressed in a timely manner.
Name and shame those manipulating the system, why must we keep silent?
It is time to close ranks and face the storm together as one team. We hold the trump card, in charting the destiny of our nation.
