Abolishing GST makes ringgit and sense for Muar traders

VOXPOP | Pakatan Harapan's plans to abolish the GST should it form the federal government after the 14th general election has been widely panned, not just by BN, but also by some economists who believe the move to be financially unsound.

Besides potentially decreasing funds available for government expenditure, there are also doubts whether reverting back to the sales and services tax (SST) would actually help lower prices.

But amid the hustle and bustle of the Muar Uptown night market, a group of traders believe that abolishing the GST is a business proposition worth considering.

Among them is Istisyam Abu Samad, 39, who plies her trade selling ice blended drinks and women's clothing.

Istisyam has been doing business in the town of Maharani for close to a decade. Business, however, began taking a hit following the implementation of GST.

Like several traders Malaysiakini spoke to, Istisyam said her profit margin has decreased significantly in the past two years, forcing her to scale down the boutique section of her business.

"Sales really fell, some days I didn't even sell any clothes," she said.

A T-shirt seller who wished to be known as Alif said his profits have fallen by more than half.

"I used to make between RM500 and RM600 a night, now I earn less than RM200 a night," the 30-year-old said while setting up his stall.

Two-pronged impact

The impact of the GST on sales and profits are two-pronged.

First, traders claim that the tax has led to an increase in costs. However, traders are reluctant to increase their own retail prices in fear of losing out in sales, as explained by Mohd Salahuddin Hamid.

"The pressure now is because the goods that we get are too expensive. If we increase the prices (we sell at) people will not buy, so we are forced to maintain our retail prices and reduce our profits," the clothes seller said.

The six percent tax has also made customers less willing to spend.

Factory technician Hazmi Ismail has been coming to the Muar Uptown night market for years. But on the night Malaysiakini met him, the 43-year-old was more interested in window shopping than actually buying anything.

"Things are tough now, our monthly expenses are higher because of the GST. Now you have to really think before buying something, and only buy if you need," the father of three said.

Like in most parts of the country, such complaints about reduced spending power are common in Muar.

This is despite cost of living in Muar being regarded as low, as cited by Bank Negara governor Muhammad Ibrahim, who last month said single individuals living in the semi-urban area could live "very comfortably" with a salary of RM2,700.

This is reportedly due to low rents and cost living. Several youths Malaysiakini spoke to shared that the rent for their homes ranges from between RM300 to RM500.

Housing loan repayments are also low, with Hazmi paying RM800 a month.

Staying thrifty

Nevertheless, customers and traders alike are still feeling the pinch, and prefer to keep their wallets closed.

"I don't spend much, I save my money for petrol which is increasing all the time," Istisyam said.

With such economic factors in mind, the idea of a Malaysia without the GST is very appealing to the traders.

For some traders like Mohd Salahuddin, it is uncertain whether abolishing the GST would encourage customers to spend more, but it is something worth trying.

"Whether it will work 100 percent or not we can't be sure, but based on our instincts we want to try (doing business without GST)... the traders will like it," he said.

Following the launch of the Harapan manifesto, Centre for Public Policy Studies (CPPS) researcher Lau Zheng Zhou had pointed out that abolishing GST would not lead to a natural decrease in prices, especially when it will be replaced with the SST.

“SST is something you impose on the producer. When you impose cost on doing business, then the businesses will pass on the cost to the consumer.

“The abolition of GST will not automatically lead to lower prices because prices tend to be sticky,” he said.  Mkini