This article first appeared in The Edge Financial Daily on August 23, 2018

Policy changes with the change in government have had an impact on businesses and CCM Duopharma Biotech Bhd (CCMD) is no different.

CCMD group managing director Leonard Ariff Abdul Shatar said the healthcare industry is awaiting clarity from the government on the sales and services tax (SST) to determine the impact it will have on margins.

“We presume that healthcare products will be exempted from the SST, but the question is do you see vitamins as healthcare?

“[There is] the uncertainty of categorisation [on whether] our products are exempted or not exempted. We need to get some clarity ... and we’ve got only 10 days,” he said.

Further, Leonard said, the ministry of health (MoH) does not have the budget to support preventive as opposed to reactive care.

“If you start taxing that, then it flies against whatever you do at the MoH, which claims to be focusing on preventive care,” he said, adding that supplements are intended for preventive care.

At the same time, he noted investments spent on the goods and services tax (GST) must now be written off under the new SST regime.

Leonard said the government still owes CCMD about RM10 million in GST refunds.

Under the GST Act 2014, the refunds of input tax should be made within 14 days. However, the refunds have seen delays up to 30 days or more.

On Aug 13, Finance Minister Lim Guan Eng said the actual shortfall in the GST refund trust account since 2015 is actually bigger at RM19.248 billion compared with RM17.911 billion because the previous federal government failed to transfer the sum to the GST refund trust account.

On the new administration, Leonard said CCMD hopes to see a higher allocation for the MoH in Budget 2019, which will be tabled on Nov 2.

“The concern I have ... is to make sure the MoH is well-funded to continue with the purchase of drugs. The challenge will be the budget, if the MoH increases its spending, I’ll be very curious to see where the money comes from [as] all the ministries position themselves as needing more money.

“The next interesting trigger point will be the national Budget 2019 because I think [in] their (Pakatan Harapan) manifesto it seems to indicate the government wanted to increase healthcare spending up to 7% of gross domestic product. At the moment, it is between 4.5% and 4.6%,” he added.

CCMD is also seeking clarity from the government on reinvestment allowances for the production of drugs, and the Off-Take Agreement programme designed to incentivise the pharmaceutical industry.

“We need clarity on the policies. We have heard people say the current government is business-friendly but that’s rhetoric. We need to understand how that translates into actual policies on the ground.

“I would like to wait for the next Malaysia Plan to give us some level of direction but that’s a few years away,” he added.