Malaysia's GST should be deferred, says Grant Thornton

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KUALA LUMPUR (Jan 5): SJ Grant Thornton today suggests that the Malaysian government defer its implementation of the goods and services tax (GST) after a sharp drop in local businesses confidence in the economy's performance this year.

The suggestion came after the accounting firm's International Business Report found that only 14% of Malaysia business owners are optimistic on the nation’s outlook for the economy when surveyed in the fourth quarter of 2014 (4QCY14), versus some 50% that was recorded in the previous quarter.

SJ Grant Thornton’s country managing partner Datuk NK Jasani believes that business confidence is a key indicator for future economic performance and from the look of things, he felt that the Malaysian government should consider measures to restore business confidence - one of which was the deferment of the GST.

“The government should seriously deliberate on delaying the implementation of GST from 1st April to perhaps 1st July. This will alleviate one major over-hanging worry for the business community and the people. The breather of time will help business confidence and also enhance the deferred implementation and compliance,” Jasani said.

He said the recent flood along the east coast of Peninsula Malaysia, together with three aviation tragedies last year, have also negatively impacted the business community.

“The actual business optimism may now be even much weaker than when surveyed around October last year,” Jasani said. 

It noted that the prevailing uncertainty is forcing businesses to delay decisions over investments for the future growth of their operations, but many are thinking about growth initiatives for the next 12 months.

Some 62% of business owners surveyed said they will most likely boost the effectiveness of their sales force, while others look to expand business overseas (40%) and domestically (34%).

The firm has also found that the number of Malaysian businesses expecting revenue to rise have dropped from 54% in 3QCY2014 to 36% 4QCY2014, while businesses expecting profit to rise has also dropped from 40% to 12% in the same period.

Meanwhile, business owners that are likely to employ more staff have fallen from 44% (3QCY14) to 32% (4QCY14).

The firm also found that global optimism has fallen to 35% in 4QCY14 against 43% in 3QCY14; Asean-wise, it has fallen from 56% to 23%.