When popularity is a bane

Published: Friday September 27, 2013 MYT 12:00:00 AM 

Updated: Friday September 27, 2013 MYT 6:53:03 AM

ALL KINDS OF EVERYTHING BY DATUK ZAID IBRAHIM

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Sometimes tough measures must be taken, even if they prove unpopular.

A POLITICIAN needs to be popular at all times, for his “legitimacy” comes from being elected as president of the party that commands the largest number of seats in Parliament.

There are other ways of being president of course – a former Umno president was in power for 22 years and in that time, only one election for president was ever held.

He was able to convince Supreme Council members that an election for the top posts would destroy the party.

Persuasion is an option for those who find democracy too difficult to manage.

I am sure Datuk Seri Najib Tun Razak, who has been returned unopposed as Umno president, wants to remain as Prime Minister for a few more terms, and to do so democratically so he can complete the reforms he has in mind for Umno as well as for the country.

Certain measures that the country needs are not popular but he will be doing a disservice if he abandons them just to be popular with his party and the voters.

Leadership is necessary on a number of critical issues and it is important that this message is not lost amidst the popularity contest of Umno’s General Assembly at the end of the year.

The country’s finances are not in great shape despite what investor Marc Faber said about Malaysia being a great place to invest in.

We are in deficit and have been for many years now.

Our household debt is seriously high, even if the Bank Negara Governor has chosen to politely describe it as “not alarming”.

Our dependence on Petronas to supplement the Budget is worrying.

The fact that the United States is also in serious deficit does not mean we can follow suit: we don’t have weapons to sell.

We must try to balance the Budget and we can only do so if we have more revenue.

The inflow of foreign money has reduced dramatically and the new mood in the United States Treasury suggests their usual “expansionary policy” will no longer be in play.

We need to be certain that if there is another financial crisis like the one in 1998, we are ready for it.

I believe it’s time the Government introduced the GST – perhaps in small doses – because we desperately need to widen the tax base.

This is where a dialogue with the Opposition will be useful.

The country must come first and there is no point in blaming past policies for the current state of affairs.

This new taxation will, of course, be unpopular, but we need to increase state revenue so that development efforts will not be stalled.

The Opposition must play their part by not being critical of the BN Government’s every development effort.

The fact that the World Bank has projected another 5% GDP growth this year despite the sluggish economic environment elsewhere suggests that the Government has been doing something right.

Helping small and medium-scale industries or SMIs is another must if we want to be economically viable in the new world.

The GLCs and other big companies will of course do their part to undertake long-term investments, but small businesses make up the real engine of growth for the economy. What is our master plan for them?

Which ministry will drive this important part of the economy?

I believe the economic advisers in Putrajaya will not regard SMIs as any less desirable than the more “sexy” deals they can put together overseas.

No country in this part of the world – not even Singapore, South Korea and Taiwan – would have succeeded economically if their small industries had not carried them through. Let’s emulate their success story.

The original idea that the Prime Minister mooted, which was to slow down “affirmative” action policies and open up the economy, must not be abandoned.

Nothing needs to be said or done before November this year, but after the party polls, economic opportunities must be made available to those who can increase productivity and induce optimum results.

Malaysia must be developed sufficiently on broad fronts, be it manufacturing, commodities or tourism.

Every Malaysian must answer the nation’s call to bring about a positive and constructive change to our country.

We want to be like South Korea and Japan. We must be richer and more powerful in more ways than Singapore.

When such calls are answered by Malaysians, they must be reciprocated with enthusiasm and given all the help they need.

The less we talk of divisive issues – better yet, of Malays and non-Malays – the better.

The more united we are, the more productive and prosperous we will become.

Finally, I hope Putrajaya will abandon some of the so-called mega projects until studies are carried out on the suitability of existing infrastructure to make such big projects viable.

I remember the announcement by Petronas that they had to defer the RM60bil Pengerang oil and gas mega plant because there was a lack of water in the area.

I can add a few more important supporting infrastructure projects that we need in southern Johor.

In Sabah and Sarawak, there has also been a spate of announcements on such big projects.

That’s understandable after this year’s general election, but I believe they can be deferred when the country’s finances are better.

This is again not a popular issue to deal with, but it needs to be done.

When Norway’s Prime Minister Jens Stoltenburg spent 4% of the country’s oil revenues to balance his Budget, he lost the premiership.

We are already using 45% of Petronas money to pay for salaries and to take care of expenditure – there is only so much money Petronas can give without severely damaging its own viability.

The country needs to be managed prudently and the excesses of the past must stop.

These measures will, unfortunately, be unpopular but the present Prime Minister must deal with them, even if his own popularity suffers.

> The views expressed are entirely the writer’s own.

AlFatihah: Mantan Menteri Besar Kedah telah kembali ke Rahmatullah.... 26 Sep 2013

Admin ingin merakamkan ucapan Takziah kepada keluarga Allahyarham YB Tan Sri Ustaz Azizan Razak, Mantan Menteri Besar Kedah yang telah kembali ke Rahmatullah pada hari ini 26 September 2013 bersamaan dengan 20 Zulkaedah 1434H. 

Admin mengenangkan beliau sebagai seorang Pejuang Agama yang hebat dan pemimpin yang patut dicontohi semangat dan kewibawaannya.

Semoga Allah Subhanahuwata'ala memberikan setinggi-tinggi kedudukan kepada roh Allahyarham dan permudahkan segala-galanya dengan Rahmat untuk beliau di Akhirat sana. Amen...

Mari kita sama-sama sedekahkan Al-Fatihah untuk Allahyarham.

85 peratus tak mampu bayar cukai

RAZIATUL HANUM A.RAJAK

25 September 2013

Tony Pua

KUALA LUMPUR - 85 peratus rakyat Malaysia tidak mampu membayar cukai barangan dan perkhidmatan (GST), kata Ahli Parlimen Petaling Jaya Utara, Tony Pua.

Beliau berkata demikian ketika berhujah pada Persidangan Dewan Rakyat, hari ini.

Menurutnya, selepas subsidi diturunkan, rakyat akan dikenakan bayaran dua kali ganda bayaran ketika ini jika GST dilaksanakan.

"Kerajaan nak menurunkan subsidi dan melaksanakan GST. Jadi rakyat 'kena' dua kali.

"Kita harap secara ikhlas, kerajaan akan menimbangkan betul-betul dalam pelaksanaan ini kerana GST akan membebankan rakyat terutamanya rakyat kelas bahawan dan yang miskin," katanya.

Katanya, 85 peratus rakyat bukan tidak mahu membayar sebaliknya tidak mampu.

"Buat masa ini, 85 peratus rakyat sekarang tidak mampu...bukan tak nak...mereka tidak mampu membayar kerana pendapatan mereka tidak melebihi RM2,500," katanya.

Domestic consumer sector a proxy for regional growth

by Ronnie Teo, ronnieteo@theborneopost.com. Posted on September 26, 2013, Thursday

KUCHING: RHB Research Institute Sdn Bhd (RHB Research) believes Malaysian consumer players will play a good proxy role to regional growth, allowing more room for growth with a younger growth profile.

The research firm met up with investors at its joint consumer sector marketing sessions in Singapore and Malaysia this month.

From the meet, the research firm noted that investors were generally more interested in our mid- to small-cap ideas in Malaysia, as the large-cap stocks are trading at the higher end of their valuations.

“Malaysia’s consumption thesis is still intact. Indonesia and the Philippines, which are still in early growth stages, have the most attractive consumer sectors in the Asean region,” highlighted analyst Ngo Siew Teng.

“While the more mature consumer sectors in other countries are seeing slower growth, Malaysia’s long-term consumption growth is still intact due to its young population profile (48 per cent below the age 25 v ersus Indonesia’s 45 per cent and Thailand’s 36 per cent).”

Ngo expects medium-term headwinds to come in the form of the goods and services tax (GST), which could be announced in the upcoming 2014 Budget and be implemented in 2015.

“Consumer sentiment may be dampened during the early stages of the GST implementation, primarily due to a lack of awareness and expectations of higher inflation, although we expect consumer spending to normalise after the gestation period.”

Meanwhile, the RHB Research analyst noted that Malaysian consumer players could make a good proxy to regional growth.

“Generally, clients like our ideas on QL Resources Bhd for its high growth stemming from its regional expansion and the recovery of poultry margins,” Ngo highlighted. “We are positive that the group is on track to deliver stronger earnings in the coming quarters.

“Another top pick, NTPM Holdings, appears to be receiving more attention since our last marketing sessions in June. Investors were pleased to know that the group’s new plant in Vietnam is slated to be ready mid-CY14, in addition to it plans to penetrate into the Thai market in the near term.”

Ngo outlined that Singapore-based clients also expressed more interest in the multi-level marketing (MLM) players, such as Amway, Hai-O and Zhulian.

With this move, RHB Research maintained neutral on the sector, suggesting that investors buy on share price weakness, especially stocks that offer good dividends.

Read more: http://www.theborneopost.com/2013/09/26/domestic-consumer-sector-a-proxy-for-regional-growth/#ixzz2fxCHQAn1

RHB Research Neutral on Malaysia’s consumer sector

Published: Wednesday September 25, 2013 MYT 1:49:00 PM 

Updated: Wednesday September 25, 2013 MYT 1:51:51 PM

KUALA LUMPUR: RHB Research is Neutral on the consumer sector and suggests investors buy on share price weakness, especially stocks that offer good dividends.

It said on Wednesday its top picks are QL Resources (Buy, Fair Value: RM4.20) and NTPM (NTPM, Buy, FV: 69 sen).

“We are downgrading Aeon to Neutral from Buy given the limited share price upside. The share price has appreciated by some 10.4% after we upgraded the stock to a Buy at end-August,” it said.

To recap, RHB Research said it met with 50 investors at its joint consumer sector marketing sessions in Singapore and Malaysia this month.

“Investors were generally more interested in our mid- to small-cap ideas in Malaysia, as the large-cap stocks are trading at the higher end of their valuations,” it said.

RHB Research said Indonesia and the Philippines, which are still in early growth stages, have the most attractive consumer sectors in the Asean region.

While the more mature consumer sectors in other countries are seeing slower growth, Malaysia's long-term consumption growth is still intact due to its young population profile (48% below the age 25 versus Indonesia's 45% and Thailand's 36%).

However, the research house expects medium-term headwinds will come in the form of the goods and services tax (GST), which could be announced in the upcoming 2014 Budget proposals and be implemented in 2015.

It pointed out consumer sentiment may be dampened during the early stages of the GST implementation, primarily due to a lack of awareness and expectations of higher inflation, although we expect consumer spending to normalise after the gestation period.

“Generally, clients like our ideas on QL Resources for its high growth stemming from its regional expansion and the recovery of poultry margins. We are positive that the group is on track to deliver stronger earnings in the coming quarters.

“Another Top Pick, NTPM Holdings, appears to be receiving more attention since our last marketing sessions in June,” it said.

RHB Research said investors were pleased to know that NTPM’s new plant in Vietnam is slated to be ready mid-CY14, and it plans to penetrate into the Thai market in the near term.

“Singapore-based clients also expressed more interest in the multi-level marketing (MLM) players, for example Amway, Hai-O and Zhulian,” it added.

TCM spearing ahead

Posted on 24 September 2013 - 05:40am

Izwan Idris sunbiz@thesundaily.com

PETALING JAYA (Sept 24, 2013): Motor analysts are most upbeat on Tan Chong Motors Holdings Bhd (TCM) prospects, driven by the group's expanding overseas footprint and a strong line up of new Nissan models that continue to win car buyers at the expense of its rivals at home, even as total industry volume (TIV) growth in the domestic market is seen to be flattish this year.

"Amid growing concerns in the sector, we continue to like TCM as vehicle sales remain resilient supported by strong model launches in 2013,'' Maybank IB Research said yesterday.

Car sales volume slowed to 51,104 units in August, the Malaysian Automotive Association said last week, as the market "normalised" following a surge in buying ahead of the Hari Raya festivities.

"We expect the 50+k vehicle sales level to sustain in September-October. We are concerned on margins erosion as car distributors sacrifice margins for volume as competition heats up in the second half of 2013,'' Maybank said.

National carmakers, led by Perusahaan Otomotif Kedua Sdn Bhd (Perodua) and DRB Hicom Bhd's owned Proton Holdings Bhd, dominated TIV in August with a 50% market share. Proton, however, continue to struggle as its market share slipped from 23% to 22% year-to-date.

Honda saw a 72% jump in new sales to 33,032 units as of end of August, led by demand for Civic and CRV. Meanwhile, TCM's Nissan franchise saw a 60% increase in volume to 35,726 units over the same eight month period.

"Proton continued to lose share to Perodua and Nissan, while Toyota continued to lose share to Honda,'' CIMB Research said.

The firm sees TIV in 2013 to be flat at 630,000 units.

"We do not expect a strong finish this year. Excise duties will not be cut and other austerity measures expected in the budget could affect sentiment,'' it said.

The government will table its Budget 2014 to Parliament on Oct 25.

The Finance Ministry secretary-general Tan Sri Mohd Irwan Serigar Abdullah said that the government is working to include the goods and service tax (GST) in the upcoming budget for it to be introduced in 2015.

CIMB Research reckoned that GST will probably "cut a few percentage points" off car prices, but said "market saturation" means it will continue to hold its "neutral" call on the automotive sector.

Despite its cautious view on the sector, CIMB Research is optimistic about TCM, the only stock in the sector it rated as "buy" with a target price of RM8.00.

"We expect earnings growth to stand out from its new model pipeline while being a beneficiary of a weakening yen,'' it said.

"It is also the only Malaysian player that has established a footprint outside the country, with its operations in Indochina and Myanmar,'' the firm added.

TCM is also rated a buy at Maybank Research with a target price of RM7.45.

Pakatan to table alternative budget with focus on fiscal reforms, GST

Tue, 24 Sep 2013 08:30:00 GMT

BY JENNIFER GOMEZ

SEPTEMBER 24, 2013

Pakatan Rakyat (PR) will table an alternative budget to pre-empt Budget 2014 to be tabled by Prime Minister Datuk Seri Najib Razak next month.

The coalition said this was to enable the people to assess which party is better at managing the country's resources.

DAP's Bukit Mertajam Member of Parliament Steven Sim (pic) said one of the issues PR will address is the goods and services tax (GST).

"We will talk about it over the next few days based on an analysis of what the budget needs to contain. And we will also be talking about the GST," he said at the Parliament lobby today.

Sim in a joint statement with PKR's Lembah Pantai MP Nurul Izzah Anwar and PAS's Kuala Krai MP Dr Hatta Ramli, said the alternative budget would focus on fiscal responsibility through budget reforms, as well as tightening of government procurement and spending rules to cut down waste, leakages and excessive costs.

Referring to the Supplementary Supply Bill tabled in Parliament yesterday to seek additional funds, Sim said the government has been tabling deficit Budgets for the past 16 years.

He said at the present rate, the country will hit the debt ceiling of 55% by the end of this year, adding that the country's debt to GDP currently stood at 53%. - September 24, 2013.

Penganalisis ramal GST bakal naikkan kemarahan rakyat

OLEH MD IZWAN

SEPTEMBER 24, 2013

Penganalisis ekonomi tidak menolak GST adalah kaedah terbaik untuk mengutip wang dan menjana pendapatan negara, sekaligus pada masa sama membantu pertumbuhan ekonomi negara.

"Lebih awal kita laksanakan lebih pantas kita menyesuaikan diri, saya jangkakan lebih banyak penambahbaikan berlaku kepada ekonomi kita.

"Ia memperkasakan pengurusan cukai dan memberi kerajaan lebih banyak fleksibiliti dalam menguruskan kewangan awam," kata Ketua Pakar Ekonomi RAM Holdings, Dr Yeah Kim Leng kepada The Malaysian Insider.

Bagaimanapun, Dr Yeah mengakui langkah itu akan menyumbang kepada inflasi yang tinggi terutamanya selepas kenaikan harga minyak baru-baru ini, tetapi melihatnya sebagai satu "realiti kehidupan".

"Mengenai inflasi, ia adalah realiti kehidupan kerana kos hidup sentiasa meningkat dari tahun ke tahun, ia tidak ada bezanya.

"Tetapi yang menjadi kebimbangan ialah kawalan dan penguatkuasaan ke atas pelaksanaan GST, ia bagi mengelakkan pihak tidak bertanggungjawab mengaut keuntungan berlebihan dan kenaikan harga yang tidak munasabah," katanya.

Fellow Kanan Institut Kajian Sosioekonomi dan Alam Sekitar (SERI), Dr Michael Lim Mah Hui, berkata pelaksanaan GST adalah satu langkah tidak adil kerana kumpulan berpendapatan rendah terpaksa membayar pendapatan boleh guna mereka lebih tinggi daripada mereka yang kaya.

"GST secara dasarnya adalah kaedah berkesan untuk mengutip wang.

"Namun, secara jelasnya GST dilihat akan menghukum kumpulan yang lebih berpendapatan rendah kerana peratusan pembayaran GST daripada pendapatan boleh guna mereka akan lebih tinggi daripada mereka yang kaya," katanya.

Lim berkata, pelaksanaan GST tidak kena pada masanya kerana kerajaan baru sahaja menaikkan harga minyak baru-baru ini di samping langkah pencegahan rasuah dan ketirisan yang masih lagi lemah.

"Kerajaan sepatutnya melihat dan menangani isu ketirisan serta rasuah yang lebih merugikan orang ramai," katanya.

Lim juga mencadangkan kerajaan mengambil pendekatan berbeza untuk meningkatkan perolehan negara antaranya meningkatkan kadar cukai bagi mereka yang kaya, meningkatkan keuntungan modal dan memperkenalkan semula cukai duti harta pusaka.

"Putrajaya perlu memperkenalkan polisi yang lebih berkredibiliti untuk mengawal defisit dan membawa pendapatan dengan cara yang lebih berkesan," katanya merujuk kepada tiga kaedah yang dicadangkannya.

Malaysia mengalami defisit fiskal selama 15 tahun berturut-turut, iaitu jumlah yang kerajaan belanjakan lebih daripada jumlah yang diperolehi, iaitu 4.5 peratus daripada Keluaran dalam negara kasar (KDNK) tahun lalu. Sementara itu, hutang kerajaan berbanding KDNK ialah pada 53.1 peratus, hampir mencecah set siling kerajaan iaitu 55 peratus.

Lebihan akaun semasa Malaysia juga jatuh kepada RM2.6 bilion pada suku kedua daripada RM8.7 bilion awal tahun ini ketika eksport jatuh selepas berita mengenai Rizab Persekutuan Amerika Syarikat akan mengurangkan dolar.

Sementara itu, Pensyarah Ekonomi Universiti Utara Malaysia (UUM), Prof Amir Hussin Baharuddin meramalkan langkah itu akan menerima aksi marah daripada orang ramai khususnya selepas kenaikan minyak.

"Demam 20 sen belum habis lagi, kalau GST ini diperkenalkan ia akan parah lagi.

"Tunggulah dua tiga tahun lagi, sekarang bukan masanya lagi. Kerajaan perlu juga pertimbangkan persepsi rakyat, lebih baik kerajaan berjimat dalam belanja dahulu sebelum mahu perkenalkan GST," katanya.

Selepas kenaikan minyak baru-baru, orang ramai meluahkan kemarahan dan menyifatkan ia satu bebanan kepada mereka, malah Pengerusi Badan Bertindak Pemandu Teksi Bermeter (BBPTB), Amran Jan, berkata pemandu teksi mengeluh mengenai keadaan selepas pengumuman Putrajaya tersebut.

"Kami ini pemandu teksi, hari-hari guna minyak. Bila minyak naik, kos penyelenggaraan juga naik hampir 30 ke 40 peratus.

"Barang keperluan harian, semuanya sudah naik," kata Amran ketika dihubungi The Malaysian Insider.

Ketua Setiausaha Kementerian Kewangan, Tan Sri Dr Mohd Irwan Serigar Abdullah mengakui bahawa kerajaan akan cuba memasukkan GST dalam Bajet 2014, yang akan dibentangkan Perdana Menteri, Datuk Seri Najib Razak selaku Menteri Kewangan, Oktober ini.

Malah, Najib dalam pembentangan Bajet 2013 tahun lalu, turut menyatakan bahawa kerajaan akan cuba menstruktur semula sistem cukai negara dalam memastikan defisit perbelanjaan kerajaan dapat dikurangkan.

Najib berjanji untuk mengurangkan defisit sebanyak 4.5 peratus daripada KDNK, Malaysia antara negara yang mempunyai hutang tertinggi di Asia.

Agensi penarafan kredit dunia, Fitch Ratings turut meletakkan Malaysia pada kedudukan negatif, serta mempersoalkan langkah kerajaan yang mengabaikan reformasi kewangan terutamanya selepas berakhir pilihan raya baru-baru ini. - 24 September, 2013.

Analyst: Budget 2014 to focus on balanced, sustainable growth

Published: Tuesday September 24, 2013 MYT 12:00:00 AM 

Updated: Tuesday September 24, 2013 MYT 4:56:04 PM

BY FINTAN NG FINTAN@THESTAR.COM.MY

PETALING JAYA: The overarching issue of balancing spending over revenue will dominate discourse on Budget 2014 as the Oct 25 date for the tabling of the supply bill gets nearer.

While not a new issue, the Fitch Ratings downgrade of Malaysia’s sovereign credit outlook to “negative” from “stable” on June 30 would continue to shadow news and research reports on the budget until the day the bill gets tabled.

CIMB Investment Bank Bhd economic research head Lee Heng Guie said this budget would be “a question of credibility and getting priorities right.”

He considers this budget to “be a watershed moment for Malaysia, as it embarks on bold fiscal reforms and economic restructuring to ensure sustainable and balanced economic growth ahead.”

Among the measures to be taken, analysts point to a broadening of the tax base (the goods and services tax or GST) and reforming the system of subsidies.

Besides these measures, they said other measures with a long-term impact to be considered included a restructuring of the economy away from a dependence on oil and gas revenues as well as in the mid-term, a sequencing of large infrastructure projects with high import content and low economic benefit.

However, despite the Government’s move to raise RON95 petrol and diesel prices by 20 sen per litre respectively from Sept 3 and recent news of an impending revision of the electricity tariff, analysts remain cautious as to how far the Government would be willing to go, given the country’s political climate.

“The Government’s window to enact difficult and materially significant reforms is relatively short,” Moody’s Investors Service senior analyst Christian de Guzman toldStarBiz.

He said the failure to demonstrate the necessary resolve now would just make enacting such reforms even more difficult over the medium term, as the longer the delay, the closer to the next election it would be.

And given that the Barisan Nasional won the 13th general election with a weaker mandate, de Guzman said “the political considerations can only intensify from here.”

He said the measures which the market hoped the Government would implement would only “help if the changes were material enough to contribute to higher government revenue (in the case of the GST) or lower subsidy spending (in the case of subsidy cuts for fuel or raising the electricity tariff).”

“Merely getting them passed may not be enough to effect meaningful fiscal consolidation,” de Guzman added.

Meanwhile, Lee said just how bold or sustainable the reforms would be depended on a credible set of budget targets, which included gross domestic product (GDP) growth, the budget deficit, revenue and expenditure based on realistic economic assumptions and reasonable forecasts.

He said the Government should also control the rise in contingent liabilities (government-guaranteed loans) by monitoring the progress of public-private partnership projects and reducing the financial burden on the Federal Government’s budget in the areas of grants, investment support and guaranteed loans to government-linked companies and statutory bodies.

As at end-June, these loans stood at RM147.3bil or 15.7% of GDP compared with RM143.1bil or 15.2% as at end-2012.

Lee said priorities would have to be set between growth and fiscal sustainability. “Faced with fiscal constraints and the risk of sovereign rating downgrades, the Government must bite the bullet now to ensure long-term gains,” he added.

Budget 2014 a watershed moment: CIMB Research

Published: Monday September 23, 2013 MYT 5:21:00 PM 

Updated: Monday September 23, 2013 MYT 5:26:15 PM

KUALA LUMPUR: Malaysia has reached a turning point and needs to show that it is ready to embark on bold fiscal reform and economic restructuring in the Budget 2014 proposals to be unveiled on Oct 25, starting with a move to rein in the budget deficit,CIMB Economics Research says.

It says on Monday the country’s fiscal challenge comes amid the risk of sovereign rating downgrades and investors' focus on the vulnerabilities of the domestic and external sectors at a time when foreign capital is flowing out.

It says Prime Minister-cum-Finance Minister Datuk Seri Najib Razak is tasked with making some necessarily tough decisions to reassure investors that the government had the political resolve to address the country’s fiscal issues.

“There are differing expectations on the budget but the reality is that the government needs to plan its operating and capital spending within its financial capacity,” CIMB Research stresses.

It adds that Malaysia is facing a number of domestic and external challenges, which require the fine-tuning of its macro-economic policy mix for growth and macro-economic stability over the medium term.

“Domestic tail risks include a slowing economic growth momentum, persistent fiscal and rising debt situation, a narrowing of the current account surplus of the balance of payments (BOP), as well as rising operating cost for companies and cost of living for households.

“External tail risks emanate from the recent sharp volatility in equity, bond and foreign exchange markets, no thanks to capital reversals due to the Fed's potential tapering of easy money and monetary stimulus,” explains CIMB Research.

It says among the things the Government needs to do is 1) embark on fiscal reform, by drawing up a timeline for rolling out the GST, making gradual subsidy rationalisation, and ensuring it spent within its means; 2) sustain private investment momentum, through corporate tax cuts and incentives for industries, 3) ensuring a sustainable external balance, by controlling public project, especially those with high import content.

It adds that property cooling measures and affordable housing initiatives are also required, and urged the Government to double floor price of properties purchased by foreigners to RM1mil.

Last but not least, CIMB Research says, there is a need to strengthen social safety net of low and middle-income households.

“The government has maintained its 2013 fiscal deficit target of 4% of GDP (-4.5% of GDP in 2012), -3% in 2015 and a balanced budget by 2020. We think this year's budget deficit target of 4% of GDP is still attainable, given the favourable revenue outcome. In the first half of this year, the actual budget deficit stood at 4.1% of GDP.

“We expect the government to target a fiscal deficit ratio of 3.5% of GDP for 2014,” CIMB Research says.

GST critical to increase revenue, reduce budget deficit — Analysts

Posted on September 23, 2013, Monday

KUCHING: It is critical for the government to increase its revenue to reduce its budget deficit, especially given the country’s narrow tax base from registered companies and labour force.

The implementation of Goods and Services Tax (GST), expected to be announced during Budget 2014 in October, is expected to reduce Malaysia’s operating expenditure (OE) and use the savings to offset a reduction in revenue caused by a cut in income tax rates, if it materialises.

In a briefing to economists, the Ministry of Finance (MoF) said the impact of the GST will likely be positive on economic growth, but with slightly higher inflation and increased debt burden on the consumers.

The ministry expected a 0.3 percentage point positive impact on overall gross domestic product (GDP) growth based on a five per cent GST.

RHB Research Institute Sdn Bhd’s (RHB Research) research team viewed that the narrow tax base (with only 11 per cent of registered companies and 14.8 per cent labour force, paying taxes), coupled with the dependence on oil revenue, which accounted for 32.6 per cent of total revenue in 2012, makes it difficult for the government to manoeuvre.

“Already, it limits the government’s ability to cut corporate and individual income taxes to make Malaysia more attractive to investors and retain talent.

“In addition, the high dependency on oil revenue makes the government vulnerable to the fluctuation of international crude oil prices, which is beyond its control.

“A sudden and significant drop in crude oil prices will likely strain the fiscal position dramatically. This is an area of concern raised by Fitch Ratings Agency when it downgraded Malaysia’s sovereign rating outlook in July.

“In 2009, the government also experienced a sharp drop in the crude oil price by 38 per cent and oil revenue accounted for close to 40 per cent of its revenue then.

“However, it managed to cushion the impact via the change of base year of the tax on petroleum income from preceding year to current year in 2010 and fortunately the crude oil price only fell briefly before it bounced back subsequently in 2010,” it explained.

Nonetheless, the government may not have the luxury, if it happens again.

As such, the government will likely announce the date to implement the GST in the 2014 Budget with indications which suggest that the GST will likely be implemented in 2015 and at a rate of around four to five per cent.

“We understand that at four per cent GST, it will be revenue neutral to the government, as the current five to 10 per cent sales and six per cent service tax (SST) will be replaced by the GST,” the research firm commented.

It noted, the government had collected a total of RM15.1 billion of revenue from the SST in 2012, of which RM9.5 billion came from the sales tax and RM5.6 billion from the service tax. However, the government has promised to look into the possibility of cutting personal and corporate income taxes upon the implementation of the GST and there is also a need to provide cash rebates to the non-tax payers.

The implementation of the GST could potentially take three years to stabilise before the government could look to increase the rate in subsequent years. This implies that the government has to reduce its OE and use the savings to offset reduction in revenue caused by a cut in income tax rates to begin the GST at four per cent.

Meanwhile, RHB Research noted that under the GST, the supply of goods and services will likely be categorised into three groups, that are standard-rated, zero-rated and exempted groups. It added, based on a preliminary proposal and computations, about 71 per cent of the 944 items in the consumer price index (CPI) basket will be standard-rated, 23 per cent zero-rated and six per cent GST tax-exempt.

This compares with 47 per cent of the items under the SST. The overall impact on CPI is 0.4 percentage point based on four per cent GST and 1.17 percentage points based on five per cent GST.

Read more: http://www.theborneopost.com/2013/09/23/gst-critical-to-increase-revenue-reduce-budget-deficit-analysts/#ixzz2ffn9jyFJ

CIMB Research maintains Neutral on Malaysia’s auto sector

Published: Monday September 23, 2013 MYT 8:35:00 AM
Updated: Monday September 23, 2013 MYT 8:37:32 AM

KUALA LUMPUR: CIMB Equities Research is maintaining its Neutral outlook on Malaysia automobile sector.

It said on Monday that UMW’s dominance of the sector continues but recent results show how hard it is to sustain earnings growth without diversification.

As for DRB-Hicom, it said the group continues to struggle with Proton, leaving Tan Chong as its only Outperform and top pick in the sector.

“As expected, August’s sales normalised after the pent-up demand and pre-Hari Raya sales jump in July. Total vehicle sales came in at 51,823 units, down 25% on-month and down 1.4% on-year. The total figure for 2013 as of Aug is 432,953 units, up 5% year-to-date,” it said.

CIMB Research said the segmental market share trends continued unabated, with non-national sales continuing to take market share from the national segment; Proton continued to lose share to Perodua and Nissan, while Toyota continued to lose share to Honda.

“We make no changes to our 0% growth forecast or 630,000 units for the full year. Although YTD growth is currently 5%, we expect 4Q13’s on-year sales growth to be affected by base effects following the exceptionally strong 4Q12 due to pent-up demand after the September 2012 Budget and easy credit.

“We do not expect a strong finish this year. Excise duties will not be cut and other austerity measures expected in the Budget (to be announced on Oct 28) could affect sentiment, in addition to a tightening credit environment.

“Expectations of a GST introduction to replace the 10% sales tax in the Budget could cut a few percentage points off car prices but not enough to change our view of market saturation. Stay invested in Tan Chong which will stand out as a prime beneficiary of the weaker yen and a strong new model line-up,” it said.

Censof holding an ace in its pack

Published: Saturday September 21, 2013 MYT 12:00:00 AM 

Updated: Saturday September 21, 2013 MYT 7:29:34 AM

ALTHOUGH quite a different animal from the other IT stocks on Bursa Malaysia,Censof Holdings Bhd often draws comparisons with MyEG Services Bhd andPrestariang Bhd, both of whom, like Censof, get most of their business from the Government.

Here is where they diverge: MyEG and Prestariang have leapt considerably ahead of the pack, with their shares returning 144% and 98% on a one-year basis, respectively, compared to Censof’s 30%.

But Datuk Samsul Husin doesn’t need to thumb his nose at the competition. Indeed, with Time Engineering Bhd in the fold, Censof’s fortunes are about to change.

“We expect one plus one to make three,” the firm’s group managing director tellsStarBizWeek.

Censof finally sealed the deal last week with Khazanah Nasional Bhd to buy the state-owned investor’s entire 45.03% stake in Time Engineering for 20 sen a share, or RM69.8mil cash, beating nine bidders, including MyEG and the privately-held Skali Group.

This isn’t the first acquisition for low-profile Censof, but it is by far the biggest and the first involving another listed entity – what more one as storied as Time Engineering.

Samsul declines to go into specifics, but he says Censof isn’t looking to overhaul Time Engineering’s management, outside of board representation and its choice of chief executive.

Khazanah, he notes, already has a roadmap in place for Time Engineering. What’s left is the implementation, Samsul says without elaborating on the details of the plan.

While he assures that Censof and Time Engineering will remain as separate listed companies, Samsul does not rule out a merger down the road, if the opportunity presents itself.

Big step, big risks

Time Engineering’s financials over the past five years have been erratic, with its profit swinging from a loss in 2008 before turning profitable and then slipping back into the red last year.

But look under the hood and things don’t look that grim, Samsul says. Its results in the first half of the year saw a 10.4% boost to the topline, while net earnings went from red to black. The firm’s after-tax margins also rose to 13.2% from just 3.4% against last year.

For Censof, which has a market capitalisation of around RM170mil, analysts say better days are in store for the software-as-a-service provider.

M&A Securities has a target price of 85 sen for the stock, while Kenanga Researchpegs it at 88 sen with an upgrade to “outperform”.

According to forecasts by Kenanga Research, Censof could post a net profit of RM22.2mil in 2014, assuming an RM7.3mil contribution from Time Engineering, despite potential write downs for the latter’s two loss-making units.

Censof’s calling card is its status as a preferred financial management software solutions (FMSS) supplier to the Government. Besides Censof, only one other player,Konsortium Jaya Sdn Bhd, is recognised by the state for the provision of FMSS services that are Standard Accounting for Government Agency-compliant.

Some key contracts held by Censof are the outcome-based budgeting system, valued at RM22.5mil for five years, awarded by the Finance Ministry and used in Budget 2013. It also has jobs with Perkeso and the Inland Revenue Board worth RM33.08mil and RM5.6mil.

Now that Time Engineering is on board, analysts see Censof bundling its services and offering both front and back-end solutions, enabling it to tap a larger pool of clients and raise the barrier of entry, thus fending off would-be rivals.

“Censof currently offers both back-end products and services such as financial management solutions, e-payment gateway services and investment/asset management solutions to its customers whereas Time Engineering offers front-end services such as Database-as-a-Service to its customers,” Kenanga Research says in a note to investors.

“One of Dagang Net Technologies Sdn Bhd’s shortcomings is its lack of a payment engine that is directly connected to the banks. The proposed acquisition would allow Censof’s T-Melmax system to add to the portal run by Dagang Net and to complement and enhance its service with T-Melmax’s payment gateway thus providing a more comprehensive service to its clients.

“We understand that Censof is planning to bundle its financial management solutions and e-payment gateway services with Dagang Net’s myTRADELINK portal. The move could provide a complete trade solution ranging from the front-end (myTRADELINK portal) to back-end services (financial management solutions and e-payment gateway services), which will further raise the entry barrier for new entrants.”

Dagang Net, a 71.25% subsidiary of Time Engineering, is the firm’s most valuable asset because of a 25-year concession it holds with the Customs Department that conducts more than 50 million electronic transactions a year worth RM1.8bil.

Time Engineering draws 70% of its profit from Dagang Net. It has a virtual monopoly to process Customs-related transactions, duty payments and electronic document transfers between the trading community, such as banks, forwarders, customers and port operators, serving a customer base of 13,000.

The concession, which helps Dagang Net maintain a healthy pre-tax margin of 30%, has been cited as Time Engineering’s biggest attraction and the reason for its many suitors.

However, taking over Dagang Net also poses a huge risk: its concession expires next September. On this Samsul is quite confident of a renewal, pointing to the high barrier of entry for such work, the lack of clear-cut competitors and Censof’s own track record with the Government.

Herculean task ahead

Still, no guarantees were given when Censof bought Time Engineering that an extension was in the bag, Samsul says.

In the meantime, Censof has surfaced as the favourite to clinch a sizeable contract from the Government to provide GST-related software services nationwide, as reported by StarBizWeek last month.

Four bidders are vying for the project, including My EG and Brilliance Information Sdn Bhd.

“The mandatory implementation of GST means that Censof will have to adjust the accounting system of its clients, creating a new source of revenue for Censof,” M&A Securities says.

“In addition, thanks to its direct role in proving the accounting services for the Government and Government-related agencies, we opine that Censof will emerge as one of the big winners of Budget 2014.”

On its international operations, Samsul is visibly chuffed by Censof’s progress in Indonesia, where it is enjoying higher margins as a result of the lower cost base there.

The company sells its wealth and asset management software in Indonesia to mainly private clients, such as big banks. Although it has sales offices in multiple countries, its foreign units account for no more than 10% of group profit.

Be that as it may, Samsul thinks the numbers put out by analysts are conservative, and he expects Censof’s profit to grow 30% following the Time Engineering purchase.

Even if Time Engineering turns out to be the toughest assignment of his career, Samsul claims he isn’t losing any sleep. Censof, he stresses, hasn’t reported a loss since it started out in 1997, and he intends to keep it that way.

Pemaju boleh tuntut semula cukai dikenakan

Publication: HM

Date of publication: Sep 21, 2013

Section heading: Main Section

Page number: 061

Kuala Lumpur: Pelaksanaan Cukai Barang dan Perkhidmatan (GST) tidak seharusnya memberi kesan kepada harga hartanah khususnya projek kediaman kerana pemaju dan kontraktor boleh membuat tuntutan semula kepada kerajaan setiap cukai yang dikenakan.

Ketua Ekonomi Kumpulan RAM Holdings Bhd Dr Yeah Kim Leng berkata, harga kediaman yang ditawarkan sepatutnya berada pada tahap neutral atau tiada peningkatan selepas GST dilaksanakan kerana pemaju berpeluang menjimatkan kos.

"Walaupun mereka dikenakan cukai untuk barangan lain, namun mereka boleh menuntut semula cukai yang dikenakan itu tidak sepatutnya pertambahan kos itu diletakkan ke atas bahu pembeli," katanya.

Menurutnya, sekiranya GST dilaksanakan, ia juga memberi ruang kepada pemaju dan kontraktor untuk menjimatkan kos secara keseluruhan kerana setiap yang dikenakan cukai boleh didapatkan semula.

"Sepatutnya, tidak timbul peningkatan harga kediaman kerana pemaju dan kontraktor dapat menjimatkan kos berikutan barangan digunakan walaupun dikenakan cukai, namun mereka masih boleh mendapatkannya semula.

"Sekiranya kos pembinaan dijimatkan, maka tiada peningkatan harga kediaman sepatutnya berlaku atau sekurang-kurangnya ia berada pada tahap neutral sebagaimana sebelum GST dilaksanakan," katanya ketika dihubungi Bisnes Metro di sini.

Is BN ready for GST? - Joe Taxpayer

SEPTEMBER 21, 2013

I refer to the letter by Veerinderjeet Singh - "Goods & Services Tax, is it time? "

Dr Veerinderjeet, perhaps a more pertinent question to ask is, "Is the BN government ready for GST"?

Sure, the Customs Department would have you believe that they are ready; but if you have had any experience in trying to obtain a tax refund from them and various other dealings, then you may think otherwise.

But that is not my question; I am asking if THE BN government is ready. The main purpose of GST is to ensure a wider and fairer method of tax revenue collection. In Singapore it is very successful because the government ensures that the bulk of GST collected goes towards enhancing the life of its lower income group, for eg by refurbishing their HDB flats.

Knowing the propensity of our BN chaps for wastage, corruption, inefficiency and mismanagement, do you really have confidence that our GST revenue would be managed with a prudent and transparent mindset?

Do we have any confidence that we are no longer going to hear of cows and condos, RM56k binoculars or submarine commissions? What about "I help you, you help me"? 

I doubt it because the prime minister is already fulfilling his "I help you, you help me" promise by rewarding his voter base, having prepared a big billion ringgit goody bag for them recently; who said Janji ditepati is mere sloganeering? Not when it's "I help you, you help me" time!

What is the point of collecting GST when the government continues to subsidize inefficient, wastage and resource hogging industries (think Proton)? What is the point when the government subsidies inefficient allocation of resources via privatization for the benefit of cronies (think the IPP contracts)? What is the point of collecting GST when we already taxed heavily by BN's love affair with the other form of "indirect tax" - corruption?

You listed the infra-structure that is necessary to operate in a GST environment; but, as our previous PM stated, we have world class infra with third world mindset in maintenance, and without exception, this extends to many of our jabatan kerajaan.

Try calling their service center hotline. It took the LHDN many years to achieve a certain service level (though still far from satisfactory, considering that they are so "efficient" when it comes to tax penalties!); does the Custom have the luxury of time to ensure a competent roll out and upkeep of the program?

Here's my conclusion; until we have a clean and efficient government at Putrajaya, GST is otherwise going to add to our social sorrows; it will, as you say 'ultimately affect the man on the street', because, the BN government is not known for the 'need to tread carefully' where Joe Public is concerned. – September 21, 2013.

* The writer reads The Malaysian Insider.

* This is the personal opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insider.

Hartanah terkesan

Publication: HM

Date of publication: Sep 21, 2013

Section heading: Main Section

Page number: 061

Byline / Author: Oleh Syarifah Dayana Syed Bakri

Kuala Lumpur: Persatuan Pemborong Binaan Malaysia (MBAM) menjangkakan harga hartanah sama ada kediaman atau komersial akan meningkat sekiranya kerajaan melaksanakan Cukai Barang dan Perkhidmatan (GST) berikutan pertambahan kos sampingan.

Presidennya Matthew Tee berkata, bagaimanapun, MBAM tetap menyokong pelaksanaan GST berikutan ia antara langkah untuk membantu negara menambah pendapatan berbanding sistem cukai yang dilaksanakan kini.

"Kami tidak mempunyai masalah sekiranya kerajaan mahu melaksanakan GST kerana ia cara yang lebih baik untuk menjana pendapatan negara memandangkan dengan sistem yang ada kini, masih terdapat individu dan syarikat yang tidak membayar cukai.

"Maka, kami percaya dengan melaksanakan GST, kerajaan dapat menjana pendapatan daripada hasil cukai dengan lebih baik dan adil," katanya ketika dihubungi Bisnes Metro.

Beliau berkata demikian ketika diminta mengulas mengenai kesan pelaksanaan GST terhadap harga hartanah memandangkan ia akan membabitkan peningkatan kos tambahan.

Menurutnya, walaupun dalam sistem pelaksanaan GST tidak menetapkan cukai tambahan kepada pembinaan rumah kediaman, namun ia sedikit sebanyak akan memberi kesan kepada kos pembinaan secara keseluruhan.

"Secara kasar, projek pembinaan kediaman tidak dikenakan GST, namun kontraktor masih perlu menanggung GST yang dikenakan untuk pembinaan projek komersial.

"Sama ada banyak atau sedikit, ia akan memberi kesan kepada kos pembinaan secara keseluruhan dan kami percaya ia akan menyebabkan harga hartanah yang ditawarkan lebih tinggi namun, pada peratusan yang kecil dan tidak terlalu mendadak," katanya.

Tee berkata, pihaknya juga meminta kerajaan memberikan tempoh sewajarnya sebelum GST dilaksanakan bagi memberi ruang kepada kontraktor dan pemaju membuat anggaran kos.

"Sebelum kerajaan benar-benar melaksanakan GST, kami perlu sedikit masa untuk membuat anggaran kos baru dan berbincang sesama ahli MBAM bagi memastikan tiada kontraktor yang menawarkan harga terlalu tinggi atau terlalu rendah kerana ia pasti akan menimbulkan suasana yang tidak baik dalam industri," katanya.

Govt expected to focus on deficit during Budget 2014

Posted on September 21, 2013, Saturday

KUCHING: The government is set to lean towards consolidating its budget deficit further, which is deemed as necessary and positive for the capital market given rising twin deficit concerns in emerging market economies and following the downgrade of the country’s sovereign rating outlook to negative by Fitch Ratings late July.

RHB Research Institute Sdn Bhd (RHB Research) underlined this in its economic update report, adding that whilst the government would like to fulfill all its promises made during the general election in the forthcoming Budget 2014, it could potentially be constrained by its unfavourable fiscal position, after suffering 16 consecutive years of budget deficit and as the debt burden becomes heavier.

Nevertheless, the research firm highlighted that the government is already looking to bring down its budget deficit further to 3.5 per cent of gross domestic product (GDP) or RM37.6 billion in 2014, and has set a target to reduce it to three per cent of GDP in 2015. It has also aimed for a balanced budget by 2020.

“This will likely be done via both the revenue and expenditure sides. From the revenue side, the key focus will be on the announcement of the Goods & Services Tax (GST), although the implementation will likely begin from January 2015,” it added.

The GST is important to aid the government in broadening its tax base that will assuage the international rating agencies to not hurry into downgrading the country’s sovereign rating.

The research firm viewed that enhance its revenue, the government will likely announce during Budget 2014, the date to implement the GST, which will likely be in 2015 and at a rate of around four to five per cent.

“Also, we expect the government to carry out more stringent tax audits and investigations to ensure greater compliance and reduce tax evasion. Indeed, we understand that the income tax collection will likely surprise on the upside in 2013, after recording better-than-expected collections in the last two years.

“On the expenditure side, apart from the resumption of the rationalisation of fuel subsidies, what the budget will do is to emphasis the commitment to award contracts based on open tender that will save costs for the government,” RHB Research said, noting that the government could cut the subsidy and raise fuel prices again six to nine months down the road.

On developments in Malaysia, the research firm opined that the government may liquidate some assets (parcels of land bank for example) and lower equity stakes of government-linked companies (GLCs) to raise revenues.

At the same time, future projects will be planned based on the Public-Private Partnership (PPP) basis that will not require significant government spending upfront.

While there are doubts that the government may not achieve its budget deficit target of four per cent GDP or RM40 billion in 2013, given various handouts given to the public in the first half of 2013 (1H13), the research firm viewed that it will likely meet its target as planned, this year.

“This is because the government will likely reduce its expenditure elsewhere to foot the bill of the handouts and it has two good years of track record of achieving its budget deficit on target in 2011 to 2012.

“Already, the real public investment fell by 6.4 per cent year-on-year (y-o-y) in the second quarter (2Q), after surging by 17.3 per cent in the 1Q and it has been growing at between 13 and 27 per in the last three quarters of 2012,” it opined.

On the other hand, it added, public consumption saw a significant jump of 11.1 per cent y-o-y in the 2Q, after growing at a mere 0.1per cent in the 1Q.

Sufficient measures undertaken in the Budget 2014 that try to address the persistent fiscal deficit and high government debt as well as the rescheduling of some low multiplier and high import content infrastructure related projects to prevent the current account in the balance of payments from falling into a deficit are deemed necessary and positive for the equity market.

“This is despite it being a tight budget with the fiscal deficit projected to narrow further to 3.5 per cent of GDP in 2014, from four per cent of GDP in 2013, and potentially higher ‘sin taxes’ imposed to raise revenue for the Federal government,” RHB Research pointed out.

Read more: http://www.theborneopost.com/2013/09/21/govt-expected-to-focus-on-deficit-during-budget-2014/#ixzz2ffoFs6wh

Public says ‘Yes’ to GST but…

Anisah Shukry

September 21, 2013

Majority surveyed agree that GST will be a good source of income for the government but personal taxes and wastage need to be reduced.

Budget2014 Feature

KUALA LUMPUR: The controversial Goods and Services Tax (GST), which is expected to be announced in the 2014 budget next month and implemented in 2015, has received the nod from members of the public.

In a random survey by FMT, Malaysians conceded that the consumption tax was necessary to enhance the government’s revenue and rein in the budget deficit, which stands at RM 14.9 billion.

“My heart says no to GST, but when I look at it logically, GST can become a source of income for the country… as long as it doesn’t burden the rakyat to the point that we are unable to feed ourselves, then I can accept it,” said Nor Atiqah Mohd Zaini, 24, an account executive at a public relations agency.

The GST is a tax imposed on goods and services at every production and distribution stage in the supply chain, including importation of goods and services, according to the Finance Ministry.

First announced during Budget 2005, its implementation was deferred to allow the government to obtain more feedback from the public. It has since received mix reactions, with many fearing that the tax would burden the lower class.

But with the introduction of the GST appearing more inevitable, the public have apparently resigned themselves to the new tax system, which is set to replace the existing sales tax of between 5% and 10% and the service tax of 6%.

“I agree with this tax if it can reduce the budget deficit, and is not spent on something totally useless like ‘more projects to develop Malaysia’,” quipped Mohamed Hariz, 33, a lecturer at a local public university.

“We sometimes, as good citizens of Malaysia need to shoulder some of the burden… but the government needs to think of strategies first before desperately posing new taxes on the masses.”

Tan Lee Mei, 27, a massage therapist, said: “I agree with the tax because it can improve our economy. But I heard they’re starting with 6%-7%, which is too high for people with lower income. The tax should be lower.”

Reduce income tax

Across the causeway, Singapore’s GST rate currently stands at 7%, from the initial 3% in 1993, according to tax experts. But local experts have reportedly called for a lower rate of 4% to 5% for Malaysians, to encourage wider public acceptance.

On the Budget 2014 websites, netizens urged the government to implement the GST immediately, while simultaneously reducing the income tax rate.

“…Eventually it’s in every middle class tax payers mind to move to another country because the taxation system is flawed! Hope the government will introduce GST and lower income tax,” netizen “Rajesh” posted on the website.

But the government has yet to announce whether income taxes will be lowered in tandem with the introduction of the GST.

Nor Atiqah agreed that the GST would take a toll on peoples’ pockets, but pointed out that “if you can buy something, you can pay for it.”

“With the tax in place, there will be differences in how we spend: we’ll be calculating the tax, evaluating whether a purchase is really worth it. If you don’t feel it’s worth it, you have to work smart and find a cheaper alternative.”

Tan echoed her views, but Mohamed, who has a family to feed, was more cynical. “In the short term, I would definitely feel the ‘difference’ in paying more. In a long run, this will be tolerated because that’s how it works, isn’t it?” he said.

“We are going to be psychologically influenced and later on feel nothing, even numb, about this tax.”

Mohamed said before introducing the GST, the government should address unresolved issues that had cost taxpayers’ millions of ringgit, such as the National Feedlot Corporation scandal.

“The government needs to do their part, such as saving money, and to be seen as doing their part. Then only after that, the rakyat would feel this sort of taxes is needed to be imposed in order to save the nation’s economy.”

Tan urged the government to study the tax rates to ensure they were in line with the income of the lower to middle classes, as they would be hit the hardest by GST.

Meanwhile, Azhan Hasbullah, who works with Petronas, pointed out that the government, has to work on its communication skills with regards to the GST.

“The Malaysian government’s communication is awful, so, yeah, they have to improve on the communication. For example, be firm – not everything is political.

“If they think its good, which it is, go for it. We have experts to implement it and it is not rocket science, as many countries have implemented it.”

[This is part of a continuing series in the run-up to the Budget 2014 to be tabled by the Finance Minister on Oct 25.]