Malaysia GST spooks IT sector

Malaysia’s IT sector is predicting a 30 per cent slump in sales after the introduction of GST on April 1.

The National ICT Association of Malaysia (Pikom) says it expects a range of price increases across to hardware, software and service prices will be passed on to consumers, resulting in an overall slowdown in consumer sentiment and Information and Communications Technology (ICT) spending, “most notably in the consumer retail segment”.

The government will introduce a six per cent Malaysia GST on April 1 on most retail goods and services, but excluding food, amongst other categories. Some sales taxes will be removed and income taxes have been realigned, but there is a general air of confusion amongst consumers as to how the new tax will affect their spending power.

“We estimate that the next six months will see a general ‘dip’ in the purchases of hardware and gadgets such as smart phones, PC, laptops, printers and other peripherals by households and consumers,” said Pikom chairman Cheah Kok Hoong in an interview.

But are his comments jumping the gun? Fast-growing Chinese smartphone brand Xiaomi announced this week it would increase the price of just one product in its range, its Redmi Note 4G flagship, which will increase in price by 6.11 per cent.

Pikom cited results of a survey ‘GST impact on Business’ which showed that more than 60 per cent of local ICT organisations that GST would have a significant impact on their business revenue.

“Pikom does not see a great impact on purchasing and investment decisions by large enterprises and corporates as the six per cent charged by suppliers can be claimed as input tax by Royal Malaysian Customs Department, assuming these companies are GST (registered),” he said.

Cheah urged ICT retailers to focus on “high-margin products and services” besides reducing costs in the months ahead, while Malaysians adjust to the new tax.

“This includes value-added consultancy, ancillary services such as free delivery and/or user training as well as offering strategic bundling or packages to complement sale of hardware and gadgets,” he said.

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