JOHOR BARU: The expanded Sales and Services Tax (SST), which comes into effect on July 1, will likely impact local traders and consumers including those coming from Singapore, say Johor business groups.
Johor Indian Petty Traders and Small Business Association chairman D. Ravindran said many of their 400-odd members have already voiced their concerns over the SST expansion.
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“We are already struggling with high costs, so the timing (of the expanded tax) has come at the wrong time.
“Many of us are already paying high rental fees especially those who are operating within the Johor Baru area,” he said when contacted.
Ravindran said that the SST expansion would lead to lower spending power of Malaysian consumers.
Although Singaporeans prefer to cross the Causeway and Second Link to shop and eat in Johor, he said that “as a local business, we cannot just depend solely on Singaporean customers or those earning Singapore dollars”.
Cause and effect: (from left) Ravindran, Teh and Fuad are concerned that small businesses would be affected by the revised SST.
“We need support from Malaysian consumers, too,” he said.
The Finance Ministry had announced that the reviewed and expanded SST, as stated in Budget 2025, would take effect on July 1.
The measure aims to strengthen the country’s fiscal position by increasing revenue and broadening the tax base.
South Johor SME Association adviser Teh Kee Sin said that the SST expansion would lead to a significant impact on Johor Baru’s economy, especially for those involved in retail, food and beverage and services.
“Surely the SST revision will increase the prices of raw materials. This would add on to the selling price,” he said.
He said that consumers, even those earning Singapore dollars, are sensitive to price increases.
Johor Baru Bazaar Karat Development and Welfare Association president Fuad Rahmat said the expected increase in SST rate would undoubtedly have an impact on the ecosystem of small traders, such as those operating at the Bazar Karat here.
“The purchasing power of local visitors as well as those from Singapore has been declining in recent times.
“With SST, prices may go up. The customer may not know that part of the cost is due to tax,” he said.
Furthermore, he said that suppliers or distributors could raise prices arbitrarily on the pretext of taxation.
Fuad said he was concerned that small traders like them do not have the bargaining power that large companies do.
“When suppliers raise their prices, we have little choice but to absorb the higher costs or pass them on to our customers.
“This, in turn, will make visitors more cautious about spending,” he said.
He urged the Domestic Trade and Cost of Living Ministry to tighten enforcement against suppliers who take advantage on the situation by raising prices without justification.
Fuad also said that the focus should not be solely on traders, but also on the supply chain, which could be the real source of these price hikes.
“As a community of micro and informal traders, I hope the government will consider providing special assistance, exemptions, or targeted subsidies, for this group, so we can continue to survive and contribute to the local economy, while helping to draw more visitors to commercial centres like Bazar Karat JB,” he said.
