Premier retail operator: Weakening ringgit a bigger concern

KOTA KINABALU: For premier retail operator Parkson Corporation Sdn Bhd, the weakening ringgit is a bigger concern compared to the Goods and Services Tax (GST) which is likely to have a minimal impact on cost of goods.

Parkson Corporation chief operating officer Law Boon Eng said their concern was not so much with GST but the ringgit’s performance against major currencies such as the US dollar and renminbi.

Based on the two factors – the GST and sliding of the ringgit – the retail prices could increase by about 25%, he said.

“The GST is only 6%. Of course it will have some impact on prices but it is nominal. The real impact is actually the foreign exchange rate from 15% to 20%,” he told reporters after opening Parkson Imago Mall at the new Imago Mall on Saturday night.

Meanwhile, UHY Loh Chartered Accountants partner Loh Chye Teik said the GST would bring a “cost down” effect for most business owners who could claim their input tax from the Customs Department.

“The good thing about GST is that all businesses are not suffering any additional cost because they get to claim back the input tax.”

Loh said the law also allows businesses to get relief if they are unable to collect their debts from customers within six months.

“This is a peculiar GST mechanism in Malaysia where the Customs Department allows businesses to claim back the output tax for invoices issued to their customers and the bills not paid by their customers within six months.

“So businesses get to claim back the GST charged to the customers which were previously paid to the Customs Department, but they must show that sufficient effort has been taken to recover the debts,” he said at a “GST & You” workshop organised by Star Publications (M) Bhd in George Town.

Pointing out that the 6% would be lower than the 10% sales tax, Loh said goods were supposed to be cheaper after GST.

“If the wholesaler is not registered, then the price will end up being more expensive.

“Under normal circumstances, Made in Malaysia goods are subjected to sales tax such as furniture and electrical goods, where sales tax is chargeable for the time being, the rate will be reduced from 10% to 6% after GST.”

Related story:

Savvy consumers save where they can before GST kicks in