PETALING JAYA: A temporary cut in the Sales and Service Tax (SST) from 6% to 3% could give Malaysia’s retail sector and consumers some much-needed breathing room, says Malaysia Shopping Malls Association adviser HC Chan.
Ahead of Budget 2027, Chan, who is Sunway Malls Group managing director, said the proposed reduction would help ease pressure across the retail ecosystem and lessen the burden on consumers, particularly those in the B40 and M40 groups.
“We must remember that there are a lot of purchases in Malaysia’s shopping malls and a lot of money spent in shopping malls.
“So that will help to lessen the burden, not only for the B40, but I think for the M40 as well.”
The retail sector has been facing higher operating costs, with businesses contending with rising wages, utilities, rentals and compliance-related expenses, while consumers have become more cautious about spending.
The expansion of SST last year under Budget 2026 also raised concerns among businesses about higher operating costs and weaker consumer demand, particularly in sectors reliant on discretionary spending.
Prime Minister Datuk Seri Anwar Ibrahim previously said Malaysia was looking at ways to make its tax system more progressive, including whether certain elements of the Goods and Services Tax (GST) could be incorporated into the existing SST.
Anwar said SST would remain the basis of the current tax system, but certain GST features could be considered if they improved it.
Datuk Joyce Yap, who is also a Malaysia Shopping Malls Association adviser, said the government should continue reviewing and simplifying thresholds and requirements for e-invoicing and SST, particularly for smaller retailers and SMEs.
“Measures that help reduce the cost burden on businesses while improving consumer spending power would have the most immediate impact.”
Yap, who is Pavilion Malls chief executive officer (Retail), said operating costs had also continued to rise, particularly for utilities, manpower, security, cleaning, maintenance and materials, putting increasing pressure on margins and the overall cost of maintaining shopping malls.
She said bringing together the government, mall operators, retailers and other stakeholders would allow them to discuss issues including SST or GST, operating costs, consumer incentives and promotional efforts collectively.
This, she added, would help ensure that measures introduced were practical and supported the industry’s competitiveness.
