Clear policies needed in Budget 2011 to boost retail sector

PETALING JAYA: Traditionally, the retail sector has not received very much focus in previous budgets except for incentives to promote brands and removal of duties on luxury goods.

Since the sector has been identified as a key economic area under the high-income growth model, industry players reckon that it is timely for the Government to introduce more specific and clear policies to boost the sector in the next 12 months.

The Government has come out with the Economic Transformation Programme (ETP) to transform Malaysia into a high-income economy by 2020, building on the 10th Malaysia Plan, the New Economic Model and the principles of 1Malaysia, People First, Performance Now.

Under the ETP, 12 National Key Economic Areas (NKEAs) had been identified to be the drivers of economic activities contributing to economic growth, including wholesale and retail.

There are 13 entry point projects to be executed over the next 10 years for wholesale, retail & distribution trade. The projects range from micro to larger retail business to make Malaysia a shopping hub.

The aim is to achieve better services, to regulate small retail businesses to be more competitive and to lift up the standard of hygiene.

Realising that NKEAs is a medium- to long-term plan, industry players feel that it is urgent for the Government to start addressing issues in the retail sector quickly.

Commenting on the upcoming budget 2011, Retail Group Malaysia managing director Tan Hai Hsin said the Government needed to come out with proper plans to uplift the economy of the people.

“When Malaysians feel the Government is doing something to improve their lives, they would start spending again as they are more willing to part with their money on retail goods and services. When Malaysians believe their jobs are stable in the next 12 months, they will go out and buy more things,” he told StarBiz in an e-mail reply.

KPMG tax partner Tan Eng Yew told StarBiz: “To boost the retail sector, we either have to increase people’s ability to spend or bring in some non-tax measures to spur the sector.”

On the tax side, he said, to put more money into people’s pockets, the obvious thing to do would be to further lower personal tax rates.

“This, however, would have to be balanced against the need to keep some cushion for the implementation of the goods and services tax (GST),” he said.

The implementation of the GST, a broad-based consumption tax that will replace the existing sales and services taxes, was scheduled for next year but has been was put off due to, among other reasons, the need for more feedback.

Previous news reports stated that the Government would have to look at new revenue sources like the GST to help raise its coffers as it seeks to reduce its fiscal deficit in the coming years.

Tan said another way to boost the retail sector was to attract more international players to create an interesting retail environment and boost the offerings.

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