Cautious spending for now pending GST abolishment

Those who want to buy cars are holding back to compare the price difference once the GST is zero-rated next month.

THE impending abolishment of the Goods and Services Tax (GST) and zero-rated GST as of June 1 is good news for consumers who have put the brakes on spending in anticipation of reduced prices, especially for big-ticket items.

Before the official announcement was made on Wednesday by Prime Minister Tun Dr Mahathir Mohamad, consumers had taken a “wait-and-see” approach especially with regards to spending on non-essential products.

According to a Finance Ministry statement, the GST rate will be reduced from 6% to 0%, nationwide, in less than two weeks.

StarMetro spoke to a few people to find out their thoughts in light of this announcement.

Shah Alam businessman M. Seelan, 33, said he would hold off buying a vehicle until the GST was abolished.

“I need a 4WD desperately for work but upon calculating the difference, I can save at least 10% once the tax is removed,” said Seelan.

He said he would wait and see how the market and policies unfold for at least a month.

Likewise, Ampang resident S. Ravi, 29, who was in urgent need of a car, said she would hold back while looking for the best deal.

Lim said Senheng’s business was moving well pre and post elections.
Lim said Senheng’s business was moving well pre and post elections.

“I know several car distributors have various incentive schemes but I want to wait until June, although some have said that prices for cars may increase despite the abolishment of GST.

“I’m willing to wait because there will be additional promotions for Hari Raya,” she added.

Similarly, photographer M. Azhar said his family would put off shopping for Hari Raya until after the GST was zero-rated.

“With three children, my expenses are tripled. So, even if I have to wait until next month to get their baju raya, it will be worth it,” he said.

Meanwhile, engineer Kim Cheong said with or without GST, necessities had to be purchased, even big-ticket items like flight tickets if there was a trip one simply had to go on.

Education consultant M. Navin said he was willing to put on hold renovations for his house and the buying of furniture until after the GST’s abolishment.

“My immediate thought now is how much extra will it cost me if I buy anything now compared to later,” he said, adding that for consumers the 6% was non-refundable.

Taman Desa resident Norhayati Ismail, 40, hoped the abandonment of the GST would reduce everyday costs.

“Even my gardener increased his charges by RM20 from RM60 to cover petrol costs and maintenance of his equipment.

“I have had to stop going for facials after my aesthetician upped the price by 30% because she had to pay GST on the products used,” she said.

Feedback from retailers

The news on the country going GST-free will affect retailers.

Some are feeling the pinch ever since GE14 ended as consumers are hesitant to shop not only for expensive items such as cars and flight tickets but also household appliances.

The spending hesitancy could be offset by expected retail growth, said Malaysia Retail Chain Association (MRCA) president Datuk Seri Garry Chua.

“Since GST was introduced in 2015, the growth has been quite sluggish.

“But with the latest announcement, we expect a 4% growth by end of the year compared to only 2% last year,” he said.

While he acknowledged that consumers were holding off spending, he said that this would not last long, especially with the coming Hari Raya celebration.

“This is good timing and we can expect to see a bigger surge in consumer spending.

Chua said with the latest announcement, MRCA expects a 4 growth by end of the year compared to only 2 last year.
Chua said with the latest announcement, MRCA expects a 4 growth by end of the year compared to only 2 last year.

“For most Malaysians, the propensity to spend is still there but consumers still look out for value- for-money buys,” he said, adding that MRCA was encouraging its members to come up with special incentives and offers to spur the market.

An example would be Subaru, which introduced its Price Protection Scheme to protect its customers from now until Aug 18.

Subaru, in a statement, said unregistered and new bookings of all vehicle models would be price protected as an assurance to all customers against price movement.

The car company will either adjust the booking price accordingly if vehicles were registered after the abolishment of GST, or issue a service voucher (for the price difference) for vehicles registered before GST’s abolishment.

Popular home appliances company Panasonic, however, said it would not refund the price difference of goods purchased prior to the abolishment of GST.

“GST is collected by the government, so unless the government devises a mechanism to refund the customers there will be no refund.

“Some of our customers are putting a hold on big-ticket items and dealers are adopting a cautious approach in keeping stock,” said a Panasonic spokesman.

Similarly, a consumer goods distributor said a few of its customers’ orders were put on hold, except for bigger retailers who were still taking stock.

“I think with Hari Raya coming up , they will need stock but we are also facing some customer hold backs on our end,” said the company’s representative Sereen Loh.

Senheng founder and managing director Lim Kim Heng said its business was moving well, pre- and post-elections.

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