Reduction may ease business cost, boost spending: ACCCIM

KUALA LUMPUR: The reduction in the Overnight Policy Rate (OPR) may ease the cost of doing business and give a slight boost to consumer spending power, said the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM).
“The reduction to a certain degree will ease a little bit the cost of doing business and of course for the consumer, they would have a little bit of extra buying power. It is a measure or strategy by Bank Negara Malaysia (BNM) in order to stimulate the market a little bit,” ACCCIM president Datuk Ter Leong Yap told reporters at a media conference yesterday.
“However, it might result in a possibility of a little pressure on our ringgit, the currency rate,” he added. He does not expect another rate cut this year.
On Wednesday, the central bank announced its decision to reduce the OPR by 25 basis points from 3.25% to 3%, against the consensus that it would not cut rates, at least until September.
Meanwhile, ACCCIM’s SME Taxation Survey 2016 revealed that the implementation of the Goods and Services Tax (GST) has driven up costs of operation for businesses.
“Although the government has repeatedly emphasised that GST will not add financial burden to businesses, the survey result however, revealed in contrary with more than 80% of the respondents indicating that GST has increased their costs of operation. These additional costs include the purchase of GST software, employment of additional staff and others,” said Ter.
ACCCIM called on the government to utilise the GST revenue wisely, to create a conducive business environment so as to ease the burden of the rakyat.
It also urged the government to accelerate the reduction in corporate tax rate to 18%, reduce the threshold taxable income for SMEs to 15% for the first RM2 million and lower the individual tax rate to 18% for the highest chargeable income bracket from 28%.
The survey was conducted from April 29 till May 31 this year and received a total of 806 respondents, of which 82% said their costs of operation had increased.
Its national council member Koong Lin Loong said there was a drop in issues faced by businesses when compared to last year’s survey results. However, 58% of respondents this year are still encountering cash flow problems due to GST.
“By far, still a fairly sizeable portion (29%) of respondents claimed that their customers refused to pay GST,” he said.
The majority of respondents (74%) said that their input tax credit have been refunded. Of the 210 respondents who are facing delays in claiming their input tax, 36% said they were not informed of any reason nor received any reply from the Royal Malaysian Customs Department.
About 28% said they were told by Customs that more time was needed to verify their claims due to the big amounts while 14% were told that their documentations were not complete.
On the special refund of sales tax in respect of goods held on hand as at April 1, 2015, Koong said only 11% of respondents applied for the special refund and 51 respondents had their claims approved.
While the majority of respondents were reimbursed within four months from application, 79% of those rejected were not given any reason.
According to Koong, most respondents do not refer to the Customs’ GST portal with only 36% of respondents being aware of the updates on the portal.