Consumer stocks face challenges

Friday September 7, 2012

By SHARIDAN M. ALI
sharidan@thestar.com.my

GST and subsidiy review looms

PETALING JAYA: Consumer sector stocks will face challenges following the 13th general election despite having done well year-to-date as the implementation of Goods and Services Tax and resumption of subsidy rationalisation looms.

Alliance Research analyst Ian Wan advises investors to be more cautious as the sector would be facing more challenges regardless of the outcome of the election.

“If the existing Government remains in power post-election, we foresee the Government to implement Goods and Services Tax (GST), resume its subsidies rationalisation programme and raise the electricity tariff to close its budget deficit in 2013. Furthermore, de-rating of the sector could happen post-election as domestic investors return to higher beta plays.

“On the other hand, if the opposition party wins the election, we foresee near term market sell down amid uncertainty over existing Government policies, leadership change in government-linked companies and government-linked investment companies, and status of existing mega projects,” the brokerage said in an update report.

From left: SME Association president Teh Kee Sin, Exim Bank Malaysia product development department assistant vice-president Zulkipli Md Yunos, Mizanur, Star Publications (M) Bhd chief financial officer Ragesh Rajendran and Bursa Malaysia head issuer for ACE Market Hanita Othman having a panel discussion to shortlist the participants for SOBA.

The report saw the consumer sector being downgraded to “neutral” from “overweight”.

“All these could dampen the economy, including domestic consumption, in the near term. Both of these scenarios will adversely affect consumer disposable income and dampen consumer sentiment, at least in the near term,” it added.

In anticipation of Budget 2013, which will be announced on Sept 28, the research house did not expect the Government to announce any excise duty hike for both of the sin sectors tobacco and brewery industries.

“Instead, we expect the Government to maintain (if not improve) a feel good' factor in the run up to the general election by, among others, containing cost of living,” it said.

On the performance of the sector so far this year, Alliance Research said it had outperformed FTSE Bursa Malaysia KL Composite Index by 4.2 percentage points in the first eight months, registering one of the best performances over the past 10 years.

“We believe the strong year-to-date performance was mainly due to record-low interest rate environment, risk-aversion by domestic investors and numerous pro-spending policies implemented by the Federal Government throughout the year,” it said.

However, the brokerage said with regards to the recently announced first half-year results, 54% of 28 consumer stocks that were widely followed by investors missed consensus estimates, of which food and beverages stocks made up the most of it.

On the flip side, a consumer sector analyst with OSK Research toldStarBiz that she was still upbeat on the sector, going forward.

“We are still overweight on the sector due to its defensive and low-beta nature, decent dividend yield and resilient performance.

“Going into 2013, there are some concerns on the slowdown of the economy but consumer stocks are still one the safest bets, as demand will still be there where people will still have to buy groceries and other stuff,” she said.

In an earlier report last month, OSK Research said that in recent years, consumer companies in the emerging markets had been consolidating to strengthen their presence and improve operating efficiencies.

“Of late, the cash-rich companies from developed nations are on the lookout for opportunities to venture into new markets, especially in the emerging countries.

“We believe there will be more consolidation or mergers and acquisitions in the consumer sector,” it said.

Malaysia debt still at manageable level

Sep 7, 2012

By Rupa damodaran

MALAYSIA’s government debt level is still at a manageable level even though expenditure will increase further this year, said Deputy Finance Minister Senator Datuk Donald Lim Siang Chai.

The figure may be high but we need to spend on various projects in areas such as infrastructure and healthcare, he said. As at the end of last year, the percentage of public debt to GDP ratio is 51.8 per cent. Although there is a self-imposed cap at 55 per cent, the government is careful in ensuring that the ratio will not exceed that level.

“At RM400 billion (total public debt), it is quite high but we have infrastructure needs now,” he said, at a media briefing after launching a one-day seminar on the recently announced Private Retirement Scheme. It was organised by the Financial Planning Association of Malaysia and Malaysia Financial Planning Council.

Standard and Poor’s Rating Services, in a report on Wednesday, said Malaysia’s public debt is on the high side for an A-rated sovereign and it expected it to rise to 53.9 per cent by the end of 2012. Lim said it is unfair to compare the debt levels with that of neighbouring Singapore or Hong Kong as Ma-laysia’s current priority needs include infrastructure.

“We are building our first MRT line and we are looking at the financing model in countries like Taiwan and Hong Kong to see if we can adopt some of their financing schemes which do not place a burden on the government.” Unlike the high debt levels of advanced economies like the US, coupled with high unemployment and slow growth rates, Malaysia still continues to enjoy strong growth, low inflation level, healthy foreign reserves as well high foreign direct investment (FDI) interest. On concerns of the economy being dependent on the oil income, Lim said the level of dependence has reduced greatly from the 1990s when it was about 50 per cent.

“Our revenue is well spread now – with oil and gas, commodities such as palm oil and rubber, manufacturing, retail market and tourism. The contribution from the services sector has also risen as Kuala Lumpur gains its recognition as the regional financial hub.” In 2011, 35 per cent of the revenue was derived from the oil and gas sector, another one-third from corporate and individual taxes and the remaining one-third from the customs tax collection from cigarettes, liquor and gaming (sin taxes).

“This year we had initially targeted revenue collection to total RM107 billion but our first half collection has already reached the RM99 billion mark. But the income tax payers form a small portion,” he said. Of the 12.8 million in the workforce, only 1.7 million pay tax while in the case of the 700,000 firms, only five per cent, or 35,000, pay taxes.Lim said the middle income bracket’s usual grouse is that the government tends to overlook their interest in the annual fiscal budget.

“Remember for every litre of petrol utilised, the government is giving a five-sen subsidy while for every kilogramme of rice consumed, the government is providing a 60- sen subsidy.” On the implementation of the Goods and Services Tax (GST), Lim said it was now in the final study phase as the government is still undertaking its awareness campaign. The second reading in the Parliament is expected to proceed soon after the government receives the feedback from the business community

Of taxes, foreigners and rates

Publication: NST

Date of publication: Sep 7, 2012

Section heading: Real Estate Decor

Page number: 003

Byline / Author: Compiled by Jan Yong; Khairul Khalid; Khairie Hisyam Aliman

  

RELAXPOLICIES: See Kok Loong, director of Metro Homes Sdn Bhd dishes out some sound ideas for a more vibrant property market.

* Real Property Gains Tax (RPGT) rate should remain the same.

* Introduce Goods and Services Tax (GST) of 4 per cent as soon as possible.

* Reduce corporate income tax and personal income tax rate to stay competitive with Hong Kong and Singapore.

* Allow more foreigners to come to Malaysia to work, stay, live and tour. Allow easy employment permit for high level employment like RM10K and above and in selected industries such as services. Only with a large pool of expatriates will our rental market for office and high end condominium move.

* Relax the MM2H (Malaysia My 2nd Home) policy and make it more efficient. The Government should promote it more as it is a good policy and is one of the ways to bring in quality foreigners to stay in Malaysia.

* Implement stamp duty waiver for RM500K and below for affordable home ownership for Malaysians.

* Property purchase by foreigners should be restricted to RM1 million and above for major cities like KL, Penang, Johor, Kota Kinabalu etc so as to avoid affecting local buyers.

* Allow maximum loan for those eligible who buy property below RM 500,000. Offer low interest rates for this category as well because the current banking system offers lower rates for bigger loans which is not fair to first home buyer.

* Allocate more prime land for affordable landed housing in the range of RM300K-500K.

* Build better public infrastructure and public transportation to allow residents to stay outside the city in places like Nilai, Seremban, Rawang etc.

* Bring in quality foreign buyers to support the high-end property market. With the demand, it will create jobs and opportunity, and result in a more balanced market where yield and capital appreciation are reasonable.

GST: What to look for in receipts

Posted on September 7, 2012, Friday

The Malaysian government will soon be implementing the long awaited goods and services tax (GST) which will replace the existing current sales tax (five per cent to 10 per cent) and the service tax (six per cent).

If the percentage of GST is determined at four per cent or five per cent then, it will be lower than the current sales tax of 10 per cent or service tax of six per cent. This series of seven articles will be publised on Mondays, Wednesdays and Fridays and highlight the purpose of the GST and why the public should support it.

Part 3

This third article deals with what to look for in your receipts during payment.

How often do we look at our receipts?

Go on, admit it – most of the time we simply discard our bill without looking at it. Unless of course, it is a hefty credit card bill. But when you head to the nearest 7 Eleven and purchase that can of Coke or when you buy a burger at McDonald’s, do you really look at your receipt and see where those figures come from?

Do you know that there are extra charges that often go unnoticed by the customer?

Do you realise that you have been paying extra charges for a long time now?

Do you have an idea of how much in extra charges you are paying?

Of course, all countries in the world collect taxes to run their countries. Service tax is one example.

As consumers, we should always be aware of the hidden and not so hidden charges that go around us. Being a consumer, we should also be aware of what we are charged for and why we are paying the extra charge.

Learned consumers have a right to know what charges are being transferred to us, what rate is being taxed, and why we should bear the burden of paying these taxes. We need to understand what our responsibilities are as tax payers and recognise what items are charged taxes and what items are not charge taxes so that we may make better informed decisions on purchasing.

One is the sales tax of 10 per cent which applies to most goods manufactured.

On the other hand, when we eat at a café, the GST is at six per cent which is the government tax on consumers.

Now going back to the sales tax of 10 per cent and service tax of six per cent, these two taxes have been around for a long time and many do not really complain about these taxes. We may accept it as ‘normal’ for us to be taxed, or we are simply ignorant of the current tax regime.

As Malaysia is thinking of introducing the GST soon, it should be known that this is not a new tax. It will instead act as a replacement to the tax that we are already paying and not a new and additional tax. This impending GST ‘replaces’ the current sales and service tax.

Furthermore, as the rate of GST tax is lower, hopefully may be lower at four per cent or five per cent, then this is a lower tax compared with what we have been paying – good news for all Malaysians indeed.

Exciting news? But there’s more to the GST that we, as informed consumers need to know and which will be unveiled in our coming articles.

For further inquiries, please refer to www.gst.customs.gov.my.

Read more: http://www.theborneopost.com/2012/09/07/gst-what-to-look-for-in-receipts/#ixzz2WC909eU4

Less dependent on petroleum revenues

FRIDAY, SEPTEMBER 07, 2012 - 13:33

The Malaysian Reserve

Location: 

KUALA LUMPUR

TACKLING CONCERNS: (From left) Malaysian Financial Planning Council president Kwo Shih Kang, Lim, Securities Commission executive director Goh Ching Yin and Financial Planning Association of Malaysia president Wong Boon Choy at the private retirement scheme forum yesterday — Pic: HAFZI MOHAMED

MALAYSIA would continue to reduce its dependence on petroleum income which constitutes about one-third of the national revenue by increasing contribution from other sectors, said Deputy Finance Minister Senator Datuk Donald Lim Siang.

“We would continue to reduce our dependence on our petroleum revenues and we expect other sectors such as the services sector, the financial sector, tourism and manufacturing to increase their contributions in the years to come,” he said yesterday.

Fitch Ratings, a global sovereign credit rating agency, had expressed concern a month ago that Malaysia would have to reduce its heavy dependence on petroleum-linked revenue and implement the goods and services tax (GST) due to concerns on weakening public finances.

Fitch Ratings said it was concerned that negative pressures may build and eventually offset the existing strengths of the sovereign credit profile unless structural weaknesses in the public finances are addressed.

However, it said efforts to address the underlying structural weaknesses within Malaysia’s public finances will be limited until after the general election has occurred as its policymakers’ foremost concern lies in winning favour with the electorate, especially after the ruling coalition Barisan Nasional lost three states in the 2008 elections.

On government debt, Lim said that the debt to gross domestic product (GDP) ratio as at December last year was 51.8% — not as high as the debt levels of the developed countries and the US which was about 200%.

He said while it was imperative that it keeps the level of debt down, it would have to continue to spend on development.

“The substantial expenditure involving billions on Mass Rapid Transit line would have to continue and we need to continue to spend on healthcare and infrastructure,” he said.

He said that implementation of the GST was in the offing but it would have to consider the timing of its implementation carefully.

On Malaysia’s fiscal deficit pattern, Fitch had said that despite having narrowed its deficit for last year at 4.8% of GDP, lower than the budgeted 5.4% due to additional revenue of 2.3% of GDP, the gains were offset by higher personnel expenditure and ‘higher than expected’ subsidy due to high global oil prices.

It added that the this year’s budget faces headwinds from global developments and the unrevised original deficit target of 4.7% of GDP deficit for this year.

Government debt still at manageable level

Publication: NST

Date of publication: Sep 7, 2012

Section heading: Business Times

Page number: 016

Byline / Author: By Rupa Damodaran

  

KUALA LUMPUR: MALAYSIA's government debt level is still at a manageable level even though expenditure will increase further this year, said Deputy Finance Minister Senator Datuk Donald Lim Siang Chai.

The figure may be high but we need to spend on various projects in areas such as infrastructure and healthcare, he said.

As at the end of last year, the percentage of public debt to GDP ratio is 51.8 per cent.

Although there is a self-imposed cap at 55 per cent, the government is careful in ensuring that the ratio will not exceed that level.

At RM400 billion (total public debt), it is quite high but we have infrastructure needs now, he said, at a media briefing after launching a one-day seminar on the recently announced Private Retirement Scheme. It was organised by the Financial Planning Association of Malaysia and Malaysia Financial Planning Council.

Standard and Poor's Rating Services, in a report on Wednesday, said Malaysia's public debt is on the high side for an A-rated sovereign and it expected it to rise to 53.9 per cent by the end of 2012.

Lim said it is unfair to compare the debt levels with that of neighbouring Singapore or Hong Kong as Ma-laysia's current priority needs include infrastructure.

We are building our first MRT line and we are looking at the financing model in countries like Taiwan and Hong Kong to see if we can adopt some of their financing schemes which do not place a burden on the government.

Unlike the high debt levels of advanced economies like the US, coupled with high unemployment and slow growth rates, Malaysia still continues to enjoy strong growth, low inflation level, healthy foreign reserves as well high foreign direct investment (FDI) interest.

On concerns of the economy being dependent on the oil income, Lim said the level of dependence has reduced greatly from the 1990s when it was about 50 per cent.

Our revenue is well spread now - with oil and gas, commodities such as palm oil and rubber, manufacturing, retail market and tourism. The contribution from the services sector has also risen as Kuala Lumpur gains its recognition as the regional financial hub.

In 2011, 35 per cent of the revenue was derived from the oil and gas sector, another one-third from corporate and individual taxes and the remaining one-third from the customs tax collection from cigarettes, liquor and gaming (sin taxes).

This year we had initially targeted revenue collection to total RM107 billion but our first half collection has already reached the RM99 billion mark. But the income tax payers form a small portion, he said.

Of the 12.8 million in the workforce, only 1.7 million pay tax while in the case of the 700,000 firms, only five per cent, or 35,000, pay taxes.

Lim said the middle income bracket's usual grouse is that the government tends to overlook their interest in the annual fiscal budget.

Remember for every litre of petrol utilised, the government is giving a five-sen subsidy while for every kilogramme of rice consumed, the government is providing a 60- sen subsidy.

On the implementation of the Goods and Services Tax (GST), Lim said it was now in the final study phase as the government is still undertaking its awareness campaign.

The second reading in the Parliament is expected to proceed soon after the government receives the feedback from the business community.

FMM mahu Bajet 2013 kurangkan cukai korporat

6 September 2012

KUALA LUMPUR - Persekutuan Pekilang-pekilang Malaysia (FMM) mengulangi gesaan supaya kerajaan memperkenal cukai korporat yang lebih kompetitif dalam Bajet 2013.

   

Naib Presidennya Raja Datuk Abdul Aziz Raja Muda Musa berkata pengeluaran merupakan sektor yang sangat penting, dengan menyumbang kira-kira 29 peratus kepada keluaran dalam negara kasar negara (KDNK).

   

"Selain mengurangkan cukai korporat, kami juga berharap kerajaan menawarkan insentif untuk menarik lebih banyak pelaburan domestik dan pelaburan langsung asing (FDI)," katanya kepada pemberita selepas menghadiri persidangan mengenai Unjuran Pasaran Indonesia dan strategi Kemasukan, anjuran FMM.

   

Dalam bajet yang akan dibentagkan oleh Perdana Menteri Datuk Seri Najib Tun Razak di Parlimen ada 28 Sept, Abdul Aziz berharap kerajaan akan mengurangkan cukai korporat bagi menarik lebih banyak FDI selain menyediakan insentif untuk bersaing dengan negara lain.

   

"Insentif yang dijangkakan ialah pelepasan cukai bagi pemasangan mesin dan peralatan baharu dan insentif menaik taraf kilang pengeluaran," katanya.

   

Abdul Aziz berkata walaupun penurunan cukai korporat akan mengurangkan pendapatan kerajaan, kekurangan itu boleh diimbangi dengan melaksanakan Cukai Barangan dan Perkhidmatan (GST).

   

"Kita perlu mengkaji pelaksanaannya di negara lain sebelum menyemak semula cukai korporat supaya ia dapat menarik pelaburan," katanya.

   

Walaupun FMM kerap menggesa kerajaan menyemak menurun cukai korporat sebelum ini, cukai korporat Malaysia masih pada 25 peratus.

   

Sementara itu, Ketua Pegawai Eksekutif Perbadanan Pembangunan Perdagangan Luar Malaysia (Matrade) Dr Wong Lai Sum berkata pendirian serius kerajaan dalam persekitaran perniagaan semasa akan digambarkan dalam Bajet 2013.

   

"Peruntukan  dalam bajet dijangka meningkatkan persekitaran perniagaan dalam negara, sekali gus memacunya ekonomi negara ke hadapan," katanya. - Bernama

Perubahan ketara peratusan cukai

Publication: BH

Date of publication: Sep 6, 2012

Section heading: Main Section

Page number: 005

Byline / Author: Oleh Zuraidah Mohamed

Kuala Lumpur: Bajet 2013 dijangka memperlihatkan perubahan ketara dalam struktur peratusan cukai pendapatan persendirian dan korporat.

Presiden Persatuan Akauntan Percukaian Malaysia (MATA), Abd Aziz Abu Bakar, berkata walaupun pengurangan cukai tidak boleh dibuat secara drastik, beliau yakin bajet kali ini tidak akan mengecewakan rakyat serta masyarakat perniagaan.

Katanya, kadar cukai pendapatan persendirian ketika ini adalah 26 peratus, lebih tinggi daripada negara jiran, justeru sewajarnya diturunkan kepada 24 peratus bagi mengurangkan beban kos sara hidup rakyat.

Sememangnya kita tidak boleh membandingkan Malaysia dengan Singapura yang mana kadar cukai pendapatannya adalah 20 peratus. Namun, kita yakin apa yang akan kerajaan umumkan pada belanjawan nanti mengikut kemampuan negara.

Bajet 2013 pastinya tidak tersasar daripada berpaksikan rakyat dengan mengambil kira pelbagai pendekatan terbaik dalam menuju negara maju serta ekonomi berpendapatan tinggi menjelang 2020, katanya kepada BH, semalam.

Datuk Seri Najib Razak akan membentangkan Bajet 2013 pada 28 September ini.

Mengulas lanjut, Abd Aziz berkata, cukai korporat Malaysia ketika ini adalah 25 peratus dan ia juga wajar diturunkan kepada 24 peratus.

MATA berpendapat langkah menurunkannya akan dapat mengurangkan jurang perbezaan cukai korporat negara ini dengan negara jiran, sekali gus mampu merangsang kemasukan pelaburan langsung asing (FDI) ke negara ini.

Bagaimanapun, kami yakin penurunan cukai korporat tidak banyak memberi kesan kerana kerajaan lebih menumpukan kepada pertumbuhan pelaburan domestik. Ini kerana kita tidak mahu bergantung kepada ekonomi luar, sekiranya berlaku sebarang krisis kita turut terjejas.

China umpamanya, mereka mempunyai pendapatan eksport yang besar terutama daripada Amerika Syarikat, tetapi mereka terdedah kepada risiko lebih besar sekiranya ekonomi utama dunia itu berdepan kemelesetan, katanya.

Ditanya mengenai pelaksanaan cukai barangan dan perkhidmatan (GST), beliau berkata, ia tidak mungkin akan dilaksanakan dengan kadar segera.

S & P: Malaysia berisiko mengalami penurunan kredit jika pembaharuan tidak dilakukan

OLEH LESLIE LAU
EDITOR EKSEKUTIF
SEPTEMBER 06, 2012

Belia mengambil bahagian dalam perarakan Hari Merdeka, 29 Ogos 2012. S&P berkata defisit fiskal negara bakal mengakibatkan penurunan kredit Malaysia. — Gambar fail Reuters

KUALALUMPUR, 6 Sept — Penarafan kredit berdaulat Malaysia mungkin akan dipotong jika kerajaan tidak menunaikan janji melakukan reformasi bagi mengurangkan perbelanjaan untuk mengurangkan defisit fiskal, kata Standard and Poor’s (S & P) dalam laporan terbarunya mengenai negara, menyertai lain-lain agensi penilaian global dalam amaran mengenai tekanan kepada profil kredit negara.

S & P berkata reformasi kerajaan harus melihat termasuk meperkenalkan cukai barangan dan perkhidmatan (GST) dan pengurangan subsidi.

“Kita mungkin menaikkan penarafan kredit berdaulat jika pertumbuhan yang lebih kukuh dan usaha kerajaan untuk mengurangkan hasil perbelanjaan dalam defisit yang lebih rendah daripada jangkaan, seperti yang dinyatakan dalam Rancangan Malaysia Kesepuluh (RMK-10).

“Dengan defisit yang lebih rendah, pengurangan ketara dalam hutang kerajaan adalah mungkin.

“Kita boleh menurunkan penarafan jika kerajaan tidak boleh menyampaikan langkah pembaharuan untuk mengurangkan defisit fiskal dan meningkatkan prospek pertumbuhan negara. Pembaharuan ini mungkin termasuk, tetapi tidak terhad kepada GST dan pembaharuan subsidi di pihak fiskal, dan pelaburan swasta serta pembaharuan mempelbagaikan ekonomi dalam agenda pertumbuhan ekonomi,” kata agensi penilaian itu.

Malaysia risks credit downgrade if reforms not done, says S&P

BY LESLIE LAU
EXECUTIVE EDITOR
SEPTEMBER 06, 2012

KUALA LUMPUR, Sept 6 — Malaysia’s sovereign credit rating may be cut if the government does not deliver promised reforms to cut spending to reduce its fiscal deficits, Standard and Poor’s (S&P) has said in its latest report on the country, joining other global ratings agencies in warnings about the strains on the country’s credit profile.

S&P said reforms the government should look at include the introduction of a goods and services tax (GST) and subsidy cuts.

“We may raise the sovereign credit ratings if stronger growth and the government’s effort to reduce spending result in lower-than-expected deficits, as indicated in the 10th Malaysia Plan. With lower deficits, a significant reduction in government debt is possible.

File photo of people shopping in Putrajaya. S&P has said the government should look at introducing a goods and services tax and cutting subsidies. — Reuters pic

“We may lower the ratings if the government can’t deliver the reform measures to reduce its fiscal deficits and increase the country’s growth prospects. These reforms may include, but are not limited to, the GST and subsidy reforms on the fiscal side, and private investment and economic diversification reforms on the economic growth agenda,” said the ratings agency.

Last month Fitch Ratings said in a separate report that Malaysia had yet to present a convincing plan to tackle the twin fiscal threats of its federal budget deficit and federal debt.

Fitch also said that data clearly showed public sector-linked activity had been a key driver of GDP growth for the last four quarters alongside robust private sector activity.

It said that the ratio of federal government debt to GDP reached 51.8 per cent at end-2011 despite strong GDP growth but barring a further deterioration in the global economy, the Malaysian government should be able to meet its 2012 deficit target of 4.7 per cent of GDP.

Fitch added that improving the nation’s fiscal position would be challenging without significant reform to address the cost of fuel subsidies, broaden the fiscal revenue base, or reduce dependence on energy-linked revenues.

Govt to spend on development, keep debt manageable

KUALA LUMPUR (Sept 6, 2012): The government will have to continue spending on development while at the same time keeping national debt at a manageable level, says Deputy Finance Minister Datuk Donald Lim Siang Chai.

He said on Thursday a significant development phase was taking place currently involving several billion ringgit worth of projects such as the Mass Rapid Transit (MRT) line. As at December 2011, the ratio of national debt to the gross domestic product (GDP) reached 51.8 per cent.

"Of course the debt figure is quite high but we have to spend money on infrastructure, healthcare and so on.

"We want to cut down the figure, which in most developed nations is 100 per cent while in the United States it is 200 per cent," he told reporters after delivering a keynote address at the "Forum on Private Retirement Scheme in Malaysia."

The forum was organised by the Malaysian Financial Planning Council and Financial Planning Association of Malaysia.

Lim said the government would work hard not to exceed the debt ceiling of 55 per cent of the country's GDP which was increased from 45 per cent in July 2009.

Several global rating agencies, including Standard & Poor's and Fitch Ratings, recently raised concerns about the strains on the country's credit profile.

Lim also said the country's dependence on the oil and gas (O&G) sector would eventually be lower going forward as the government had beefed up efforts to broaden its revenue base.

Lim said currently, the O&G sector supplies about 35 per cent of government revenue, followed by the commodity sector (palm oil and rubber), manufacturing, retail market and tourism.

"The dependence level in the 1990s was as high as 50 per cent and we have come down now with the expected increase in contribution from the services sector given the efforts put in place to boost the industry," he explained.

On the Goods and Sales Tax (GST) Bill, Lim said the second reading will be tabled in Parliament as soon as the feedback from the business community is received. "Currently, we are holding an awareness campaign and more people are acknowledging it," he said. - Bernama

GST benefits outweigh costs, says Maybank chief

KUALA LUMPUR, 5 SEPTEMBER 2012 (Business Times) - Malayan Banking Bhd (MAYBANK) chief executive officer Datuk Seri Wahid Omar hopes the Budget 2013 will look into the implementation of the Goods and Services Tax (GST).

He said the tax has more benefits than disadvantages to the economy, a major one being it would lessen the number of tax evaders.

"I am hopeful that the government will look at implementing it because I am personally in favour of it," he told reporters when met during the MAYBANK Hari Raya open house here yesterday.

Wahid said there is a need to broaden the base of the Malaysian tax system.

An efficient communication to the public about GST is highly needed to allow Malaysians to be prepared for the tax system which is considered to be more comprehensive, effective, transparent and business-friendly.

"With GST, the opportunity for tax evasion will be lessened. When we have a good GST system, we can actually start lowering the tax rate," Wahid said, noting that there are too many misconceptions about the system and that familiarity will eventually make the public realise that the benefits far outweigh the costs.

"If GST is implemented, we can always always start with a lower rate, at maybe 3 to 4 per cent," he said.

"I am not sure if it should be done from January 1, 2013 or another year," he said, adding that it would be good if there's some indication on the date of implementation.

Wahid is also hopeful that the upcoming budget will announce a conducive tax environment which will facilitate companies' efforts to carry out corporate social responsibility programmes.

GST benefits outweigh costs, says Maybank chief

Publication: NST

Date of publication: Sep 5, 2012

Section heading: Business Times

Page number: 001

Byline / Author: By Roziana Hamsawi

  

KUALA LUMPUR: Malayan Banking Bhd (Maybank) chief executive officer Datuk Seri Wahid Omar hopes the Budget 2013 will look into the implementation of the Goods and Services Tax (GST).

He said the tax has more benefits than disadvantages to the economy, a major one being it would lessen the number of tax evaders.

I am hopeful that the government will look at implementing it because I am personally in favour of it, he told reporters when met during the Maybank Hari Raya open house here yesterday.

Wahid said there is a need to broaden the base of the Malaysian tax system.

An efficient communication to the public about GST is highly needed to allow Malaysians to be prepared for the tax system which is considered to be more comprehensive, effective, transparent and businessfriendly.

With GST, the opportunity for tax evasion will be lessened. When we have a good GST system, we can actually start lowering the tax rate, Wahid said, noting that there are too many misconceptions about the system and that familiarity will eventually make the public realise that the benefits far outweigh the costs.

If GST is implemented, we can always always start with a lower rate, at maybe 3 to 4 per cent, he said.

I am not sure if it should be done from January 1 2013 or another year, he said, adding that would be good if there's some indication on the date of implementation.

Wahid is also hopeful that the upcoming Budget will announce a conducive tax environment which will facilitate companies' efforts to carry out corporate social responsibility programmes.

GST: Experience of other countries

Posted on September 5, 2012, Wednesday

THE Malaysian government will soon be implementing the long awaited goods and services tax (GST) which will replace the existing current sales tax five per cent to 10 per cent) and the service tax (six per cent).

If the percentage of GST is determined at four per cent or five per cent then, it will be lower than the current sales tax of 10 per cent or service tax of six per cent. This series of seven articles will be publised on Mondays, Wednesdays and Fridays and highlight the purpose of the GST and why the public should support it.

Part 2

This second article deals with the experience of GST in various countries that have already implemented it.

GST or otherwise known as Value Added Tax is a form of tax that is designed to eliminate cascading tax – often practiced in sales tax. This form of tax is more effective in that it is refunded to all parties in the chain of production other than the final consumer.

The VAT/GST tax system is better than other models because it reduces hidden taxes. The system is non-regressive and fair to the final consumer. Any negative effect on low-income people due to the flat tax rate can be compensated by the government through various measures as VAT/GST provides the government with a steady flow of revenue.

Already adopted in more than 140 countries, it has been tested and proven to work well with the public and the government.

To illustrate this point, it’s best to look at examples in the countries that have adopted GST. Take for example, Australia where GST was introduced in 2000. When GST was implemented, there was corresponding reductions in personal income taxes, state banking taxes, federal wholesales tax and some fuel taxes, leading State Treasurer Peter Costello to claim that people were effectively paying no extra tax.

Likewise, Curtin University of Technology, Perth in 2000 made statements that the real estate market would be impacted with an eight per cent increase in the cost of homes with the introduction of the GST.

This proved to be false as the real estate market boomed between 2002 and 2004 and demand saw a dramatic increase. This is an example of negative perception of GST which in reality is merely assumptions that are far from the truth.

In Canada, the GST replaced the Manufacturer’s Sales Tax and came into force in 1991. The tax did not apply to products such as groceries, residential rent, and medical services, and services such as financial services.

New Zealand introduced GST in 1986 and unlike most countries, there are few exemptions: for example, all types of food are taxed at the same rate. However, there are a few exceptions including rents collected on residential rental properties, donations, precious metals and financial services. The laws in New Zealand ensured that prices on headlines must be GST inclusive, except when businesses claim to be mainly wholesale client-based.

In the European Union, the GST, better known as the Value Added Tax, are known as ‘output VAT’ (VAT on its output supplies) and ‘input VAT’ (VAT that is paid by a business to another business on the supplies it receives). A business is usually able to recover the tax it paid either by setting it against the output VAT of if in excess by claiming a repayment from the government.

Malaysia is thinking of introducing the GST soon as a better and more effective tax to replace the Sales Tax and Service Tax. Since it is already well received and implemented in more than 140 countries, there is no doubt that should this come to Malaysia, the system will prove to be effective and efficient.

Read more: http://www.theborneopost.com/2012/09/05/gst-experiences-of-other-countries/#ixzz2WC7ravav

GST can be implemented, but at low rate, says Maybank’s Wahid

Premalatha Jayaraman sunbiz@thesundaily.com

KUALA LUMPUR (Sept 5, 2012): The government can start imposing the highly-anticipated goods and services tax (GST), said Malayan Banking Bhd president and CEO Datuk Seri Abdul Wahid Omar, suggesting a low rate of 3% or 4% to begin with as opposed to the current 6% service tax.

He said a lower GST will allow people to familiarise themselves with the new system.

“As far as Budget 2013 is concerned, we are hopeful that there are a number of areas that the government will look at. I am personally in favour of the implementation of GST. I think there is a need to broaden the base of our tax. When you have a good and effective GST system, you can look at lowering the tax rate,” Wahid told reporters on the sidelines of Maybank’s Hari Raya open house here yesterday.

He believes that the business community will support the GST if it is communicated effectively, adding that the government has been preparing businesses and corporates to get ready for the tax regime.

He added that the biggest benefit from a GST legislation is the avoidance of tax evasion.

Wahid also hopes that Bank Negara Malaysia will continue to maintain a conducive monetary policy both in terms of interest rates and other measures.

“As far as the interest rate is concerned, it is very important to maintain a low rate to encourage more investment (inflows),” he said.