Bad news and no end in sight

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  • Thursday, 09 Apr 2015

THE implementation of the GST is bringing bad news from all directions.

There will be more bad news, and maybe even more to come – that is the stark realities on the


Already, eateries in places like Miri are already capitalising on the GST just to hike the price of their foodstuffs, regardless of whether these premises are affected by GST or not.

Many coffeeshops and restaurants are simply hiking the costs of their food and drinks at will.

That is not the worst of the bad news.

I think the worst is maybe relating to the housing sector.

Three days ago, I had tea with a very senior manager of a major housing development company and he told me the prices of construction materials were going to shoot up very soon.

“The new batch of construction materials we are ordering from outside Sarawak like steel bars will soon cost much more than now.

“Transportation costs are also going up because transporters are going to charge GST,” he confided.

“This will happen in the shipping sector and also the lorry and land cargo sectors, as well as the port sector.

“All these extra costs coming from the GST will be passed down to the house buyers. They are the ones ultimately having to bear the end results of GST.”

Even though the government leaders in Putrajaya had given many assurances that GST will not burden the rakyat, the realities on the ground are very different from the politicians’ words.

Already, the construction sector in Sarawak had been hit before by a drastic hike in the price of steel bars – the very basic products for the building of residential houses, industrial factories, commercial complexes and office blocks.

There had been a surge in the price of steel bars by several notches since the past two years following the government’s move to reduce fuel subsidies that had led to the increase in price of diesel and petrol.

And if that is not enough, transportation companies in Sarawak had increased their charges by at least 15%.

Sarawak Metro was informed by builders in Miri and Bintulu that they are going to hike the prices of newly-built houses and also other construction-related services like building repairs and renovations because they are suffering from higher overhead expenditures following the GST move.

A ground check with several construction towkays confirmed that they have already been hit by the price surge of steel and that the price increase will be felt by the rakyat to a considerable extent.

There is also a danger that there will be more price hikes soon, especially in the prices of premix cement and also in the costs of lorry transportation.

The steel bars used in the construction sector in Sarawak are all imported from Peninsular Malaysia.

Last time, Sarawak had a steel mill, but after it stopped operation, it has to import from west Malaysia.

“The suppliers from the peninsula had increased their charges and we therefore have to pay extra for the steel bars now,” said the manager I spoke with.

The GST move has now resulted in a series of chain increase in costs that will ultimately be felt by the rakyat.

While it is understandable that the government has to eventually expand its tax structure in order to gain more revenue, it cannot result in a multi-fold chain reaction that sees the sky-rocketing of prices of many goods and services.

In 2008, the government drastically reduced the subsidies of fuel and then other social and economic sectors suffered immediate drastic impact because the prices of everything shot up.

The manager said: “Now, we are again seeing the same effect. When the prices go up, they never come down – that is a fact.

“The government must come up with some sort of mitigating plans on how to ensure it can still control the prices of essential goods and services.

“Right now, there is a lack of such mitigation and control plans. There is a danger everything will go haywire in terms of price increase,” he stressed.

A housing sub-contractor in Miri also said that there was a danger that other materials used in the construction industry, such as tiles, glass materials and roofings, might also see a price hike soon.

A lot of these materials, especially the higher quality ones, are also imported from the peninsula states, as well as from foreign countries.

That is bad news, and I am afraid there will be more to come in the months ahead.

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