Are Malays powering the nation ?

The real Malay dilemma: race, religion & politics messed up!

Old politics: If the leadership keeps to the racialist, feudalist and religious-centric tactics and policies of the past, thinking this is what they need to do to keep the votes, it will just be the repeat of past mistakes of the Umno era.

Malays are powering the nation

WE refer to “The real Malay Dilemma” (The real Malay dilemma: race, religion & politics/Sunday Star, Aug 26) by Siti Kassim. Siti’s rambling diatribe against Malay Muslims can be reduced to two baseless, provocative, insulting and defamatory allegations, namely:

1. Assimilation of Islamic values in governance is responsible for Malay backwardness and inability to compete with other races; and

2. Malays, constituting 60% of the population, are unproductive and parasitical, depending on the industry and labour of the remaining 40%, Chinese and Indians.

On the assimilation of Islamic values in governance, Siti questions whether “a Malay society, more insular and superstitious in thought... can compete on a fair footing with the rest of the Malaysian non-Muslim population.” She writes that Malays have been given preferred places in universities, GLCs and the civil service for over 40 years, resulting in “uncompetitive universities, a significant pool of unemployable Malay graduates and with most being employed by the civil service... failed GLCs and ...corrupt administration...” She asks if more religion would help and continues, “This has been the unintended consequence of the assimilation of Islamic values in governance.”

What evidence has Siti got to link the above allegations of Malay backwardness to the so-called Islami­sation? Has she conducted any studies or consulted reports and research findings to come to that conclusion? Her claim is just hot air driven by prejudice towards Islam.

There has been no assimilation of Islamic values in governance as provided by the syariah. Having prayer rooms in government offices, teaching Islam to Muslim students in schools, broadcasting azan on TV or having an Islamic TV channel do not make governance Islamic. The Malaysian state is based on a constitution drafted by secular jurists and not on syariah. Most government leaders and top bureaucrats, products of Western education, are very much influenced by secular ideas and ignorant about Islam and its contributions to civilisations.

It is the separation of the moral from governance under a secular system that has facilitated the corruption, abuse of power, nepotism and cronyism of our government leaders and administrators. So, why blame Islam?

Siti condemns Malays as parasites. The Cambridge English Dictionary defines a parasite as a person who is lazy and lives by other people working and giving them money.

Siti writes that the majority of Malays are satisfied with their lives and carry on being religiously obsessed because they have been “able to live off the teats of the government in one way or another”.

She continues: “Thirty per cent to 40% of the population cannot sustain 100% of us. You need the remaining, at least majority, of that 60% (Malays) to be able to truly contribute economically and not be consumers of tax from the minorities. And religion is not an economic contributor. It is an unproductive consumer of epic proportions with no returns.”

Obviously, she has not heard of Max Weber’s The Protestant Ethic and the Spirit of Capitalism. To Siti, Malay businessmen, professionals, workers, farmers, fishermen, civil servants, police and soldiers do not contribute sales tax, income tax, road tax and other taxes payable under our laws. They are only “consumers of tax from minorities (Chinese and Indians)”. In other words, they are parasites. This is an insulting and provocative lie!

She claims that the transformation of Malaysia from an agricultural to an industrial nation with liberal economic policies was “powered by an industrious non-Malay population and the liberal segment of the Malay society”. She must have been blinded by prejudice not to see the role played by millions of Malay workers, engineers, surveyors, architects, policymakers and administrators in the industrial development of Malaysia.

Good public education and healthcare services are essential to becoming a developed industrial society. In 2016, Irina Bokova, then the Unesco director-general, praised Malaysia for “leading the way in South-East Asia in fostering inclusive and equitable education as the basis of sustainable green growth”.

And in his message on 2018 World Health Day, WHO regional representative Dr Lo Ying-Ru Jacqueline stated that Malaysia has been acknowledged globally for its high-performing health system based on a well-trained workforce, excellent infrastructure and quality service delivery.

Since independence, infant death has fallen by more than 90% to 6.7 deaths per 1,000 live births in 2016. Maternal mortality has also decreased by 89% between 1963 and 2013.

Who are these “well-trained workforce”? Mostly “unemployable Malay graduates” from “uncompetitive universities” and other institutions.

Who are the members of “the liberal segment of the Malay society” who powered the industrial transformation of Malaysia?

Are they those who are blond and advocating “separation of religion and government; religion must be a private matter and kept private; take out religious education from the public arena”? Or those who call for recognition of homosexual, gay and lesbian rights; criminalisation of polygamy and decriminalisation of adultery; and free sex?

Sorry Siti, if there was any contribution from this deviant group, it was very minimal as many of them look to green pastures outside Malaysia and migrate. The rapid transformation of the Malaysian economy has been powered by patriotic devout Malay Muslims and the minorities, Chinese and Indians.

It is not the Malays who face a dilemma in engaging the modern world because their religion teaches them to seek success in this world and in the hereafter (Quran 2:201). It is Siti who faces a serious dilemma on whether to decolonise her thinking and become a true Malay Muslim or remain a Western secular clone.

By MOHD AZMI ABDUL HAMID President Malaysian Consultative Council of Islamic Organization

Endorsed by:

Syekh Ahmad Awang, chairman, International Union of Muslim Scholars Malaysia
Syekh Abdul Ghani Samsudin, chairman, Secretariat for the Assembly of Ulama of Asia
Assoc Prof Dr Roslan Mohd Nor, secretary-general, Ulama Association of Malaysia
Datin Ustazah Aminah Zakaria, chairperson, Persatuan Persaudaraan Muslimah Malaysia
Hj Baharudin Masrom, secretary, Kongres Ummah
Dr Mohamad Ali Hassan, committee member of SHURA
Prof Dr Rahmatullah Khan, committee of MaSSa
Dr Abdul Rahman Ahmad, committee of SUARA
Datuk Abdullah Mad Din, former director of Islamic Division, Ministry of Education
Datuk Hadzir Md Zain, former deputy director-general, Implementation Coordination Unit, JPM

Elaborating the dilemma in today’s terms

I REFER to the comments from the Malaysian Consultative Council of Islamic Organization in response to my latest column “The real Malay Dilemma” (Sunday Star, Aug 26).

Mine was an opinion piece. It seems the writer of the letter from the Malaysian Consultative Council of Islamic Organization and the characters endorsing it cannot differentiate between journalism and opinion. Having said that, whatever I say speak for itself.

Our former prime ministers Tunku Abdul Rahman, Tun Abdul Razak Hussein and Tun Hussein Onn were all secularists. Our present Prime Minister Tun Dr Mahathir Mohamad’s “Malay Dilemma” and what he continues to say today about how we Malays practise Islam still stands. I just elaborated the dilemma in today’s terms.

Is our Malay society not more insular or more superstitious than in the 80s? Ask yourselves. I won’t go into the nonsense and tahyul being preached on Malay sites that are popular today; let’s just look at the public universities that are managed and led by Malays. Did we use to have faculties in universities producing anti-hysteria kits or paranormal detection equipment or holding seminars on hell or how to interact with non-Muslims?

There’s a chief syariah judge proposing to have standard operating procedures for cases with “mystical elements”.

What is going on? Even in the 70s or 80s, such nonsense was unheard of among Malays leading our institutions.

Just reading the rants equating liberalism with perverts and everything to do with sex practically tells one of their mindset. They cannot escape from their dogmatic conservative religious notion of what makes a person a liberal.

They are intent on demonising liberalism so they can impose devoutness as they see it unto society.

Where were all these defenders of Islam and the Malays when our leaders were robbing the nation blind? Did we hear a peep from them?

I speak of leadership to change our society. I am so glad, in spite of the recalcitrant conservatives, that the Sultan of Selangor took the mantle of leadership and pronounced that the legal age of marriage be raised to 18 for Muslims. That is liberalism.

Only liberals have been calling for this to protect the childhood of our girls and to ensure they have the opportunity for education and a full life.

I am a Malay and a Muslim. I will speak up for the good of our society without fear or favour or intimidation. We need to face our demons and change to progress. Someone needs to tell the inconvenient truths.

By SITI KASSIM

National unity – an inconvenient truth?

Dear new government, if you continue to divide us, you will rue the day.

TWO events in recent days reminded me what is truly important to this nation.

The first was the National Day celebration on Friday in Putrajaya.

Although the euphoria over GE14 has waned, there was still enough to make me want to be part of the National Day celebration even if via my telly. So I did something I hadn’t done in years: got up early just to watch the parade.

The cameras at Dataran Putrajaya showed thousands of Malaysians who were more excited than me and had taken the trouble to line the thoroughfare to enjoy the spectacle and catch glimpses of members of the new Cabinet.

Indeed, it was deja vu to see Tun Dr Mahathir Mohamad as Prime Minister and Tun Dr Siti Hasmah Mohd Ali sitting with the Yang di-Pertuan Agong Sultan Muhammad V on the VIP grandstand.

It was also a touch surreal to see several faces we once thought impossible to see in such a setting – Cabinet members such as Datin Seri Dr Wan Azizah Wan Ismail, Gobind Singh Deo, Lim Guan Eng, Mohamed Sabu, M. Kulasegaran and Teresa Kok.

On the pavement, the opening and closing acts by flag-waving young Malaysians dancing in unison warmed the cockles of my heart.

I appreciated the effort to ensure all races were brought together to perform in a show of unity, emphasising the slogan: Sayangi Malaysiaku.

Yes, I do love my Malaysia, as do millions of others who were born and bred in this gracious, blessed land. That birthright is what unites us all.

And that is the key lesson to the well-being of our nation – unity.

Which leads me to the second event: the GE14-inspired movie, Rise: Ini Kalilah.

I caught it on Monday night and relived somewhat that incredible time when Malaysian history was made.

While not perfectly told and it is a story that only Malaysians can fully understand and appreciate, the movie has enough to keep its audience interested and it ultimately delivers the feel-good factor as it too reinforces the power of unity; that is, what can be achieved when enough citizens unite for a common cause.

Yet that power was never properly developed because it was politically inexpedient.

For its own political survival, especially after the 2008 GE, the Barisan Nasional government preferred to use race and religion to divide and rule the nation. That ultimately wreaked havoc on our interracial ties, as stated in local human rights group Pusat KOMAS’ Malaysia Racial Discrimination Report released in March this year.

National unity, as far can I can remember, was trotted out as important only after something bad had happened.

It took the terrible May 13, 1969, racial riots for the government to set up the National Unity Council.

The council was disbanded in 1971 and replaced by the National Unity Advisory Council, whose secretariats were the Department of National Unity and the National Muhibbah Office.

The two agencies were merged to form the National Unity Ministry in 1972. But it only lasted till 1974, when it was replaced by the National Unity Board.

The next time national unity took the spotlight was after GE13. The results showed the need to do something to reduce racial polarisation and to build a “united Malaysian nation”. That led to the formation of the National Unity Consultative Council in September 2013.

The NUCC held a series of meetings with agencies and NGOs to formulate a National Unity Blueprint. In 2014, it proposed three so-called Harmony Bills to replace the Sedition Act.

But the Act remained and the Bills became mired in controversy since they would make it mandatory for the government and all persons to promote equality and prohibit discrimination based on religion, race, birthplace, gender and disability. That was somehow anathema to the Malay agenda and the Bills went on the backburner.

It would appear the previous government saw the need for better national unity as an inconvenient truth and continued to use it for “display purposes only.”

So whither national unity in New Malaysia?

Political scientist Chandra Muzaffar, in criticising Pakatan for leaving it out in its election manifesto, wants the new government to make its stand known and emphasise the Rukunegara to show “it is serious and sincere about one of Malaysia’s foremost challenges but would have also demonstrated that it is crystal-clear about the direction we should take as a people.”

But others take a different view. Prolific online commentator T.K. Chua says: “What is the point of declaring unity as our goal when our policies, programmes and actions are doing just the opposite?”

He adds: “It is time to stop the endless declarations and slogans typical of a third world country. We can’t talk ourselves to national unity. National unity is the product of years of inclusive policies, programmes and actions.”

And that is what he wants to see in the Pakatan government – action, or in today’s jargon, walk the walk.

I take both views to be important: talk the talk and walk the walk. In our fractured nation, we sorely need to hear Pakatan leaders openly and loudly embrace national unity as a must-do KPI and then see them implement it in all their policies and actions for the long haul. Only then can we hold them to their words and judge them by their actions.

For now, Pakatan still seems dazed by its own victory and further stunned to find government machinery that Dr Mahathir says is broken.

If that is the case, Pakatan has the chance to rebuild the machinery that was abused by its predecessors and set it right. No more “divide and rule” but “one for all and all for one”!

By June H L Wong


Related posts:

The real Malay dilemma: race, religion & politics messed up!

Old politics: If the leadership keeps to the racialist, feudalist and religious-centric tactics and policies of the past, thinking this is what they need to do to keep the votes, it will just be the repeat of past mistakes of the Umno era.

New Malaysia should push for meritocracy

The Meritocracy Paradox

Malaysia sacrifices talent to keep one race on top, said Lee Kuan Yew of Singapore

Are Malays powering the nation ?

The real Malay dilemma: race, religion & politics messed up!

Old politics: If the leadership keeps to the racialist, feudalist and religious-centric tactics and policies of the past, thinking this is what they need to do to keep the votes, it will just be the repeat of past mistakes of the Umno era.

Malays are powering the nation

WE refer to “The real Malay Dilemma” (The real Malay dilemma: race, religion & politics./Sunday Star, Aug 26) by Siti Kassim. Siti’s rambling diatribe against Malay Muslims can be reduced to two baseless, provocative, insulting and defamatory allegations, namely:

1. Assimilation of Islamic values in governance is responsible for Malay backwardness and inability to compete with other races; and

2. Malays, constituting 60% of the population, are unproductive and parasitical, depending on the industry and labour of the remaining 40%, Chinese and Indians.

On the assimilation of Islamic values in governance, Siti questions whether “a Malay society, more insular and superstitious in thought... can compete on a fair footing with the rest of the Malaysian non-Muslim population.” She writes that Malays have been given preferred places in universities, GLCs and the civil service for over 40 years, resulting in “uncompetitive universities, a significant pool of unemployable Malay graduates and with most being employed by the civil service... failed GLCs and ...corrupt administration...” She asks if more religion would help and continues, “This has been the unintended consequence of the assimilation of Islamic values in governance.”

What evidence has Siti got to link the above allegations of Malay backwardness to the so-called Islami­sation? Has she conducted any studies or consulted reports and research findings to come to that conclusion? Her claim is just hot air driven by prejudice towards Islam.

There has been no assimilation of Islamic values in governance as provided by the syariah. Having prayer rooms in government offices, teaching Islam to Muslim students in schools, broadcasting azan on TV or having an Islamic TV channel do not make governance Islamic. The Malaysian state is based on a constitution drafted by secular jurists and not on syariah. Most government leaders and top bureaucrats, products of Western education, are very much influenced by secular ideas and ignorant about Islam and its contributions to civilisations.

It is the separation of the moral from governance under a secular system that has facilitated the corruption, abuse of power, nepotism and cronyism of our government leaders and administrators. So, why blame Islam?

Siti condemns Malays as parasites. The Cambridge English Dictionary defines a parasite as a person who is lazy and lives by other people working and giving them money.

Siti writes that the majority of Malays are satisfied with their lives and carry on being religiously obsessed because they have been “able to live off the teats of the government in one way or another”.

She continues: “Thirty per cent to 40% of the population cannot sustain 100% of us. You need the remaining, at least majority, of that 60% (Malays) to be able to truly contribute economically and not be consumers of tax from the minorities. And religion is not an economic contributor. It is an unproductive consumer of epic proportions with no returns.”

Obviously, she has not heard of Max Weber’s The Protestant Ethic and the Spirit of Capitalism. To Siti, Malay businessmen, professionals, workers, farmers, fishermen, civil servants, police and soldiers do not contribute sales tax, income tax, road tax and other taxes payable under our laws. They are only “consumers of tax from minorities (Chinese and Indians)”. In other words, they are parasites. This is an insulting and provocative lie!

She claims that the transformation of Malaysia from an agricultural to an industrial nation with liberal economic policies was “powered by an industrious non-Malay population and the liberal segment of the Malay society”. She must have been blinded by prejudice not to see the role played by millions of Malay workers, engineers, surveyors, architects, policymakers and administrators in the industrial development of Malaysia.

Good public education and healthcare services are essential to becoming a developed industrial society. In 2016, Irina Bokova, then the Unesco director-general, praised Malaysia for “leading the way in South-East Asia in fostering inclusive and equitable education as the basis of sustainable green growth”.

And in his message on 2018 World Health Day, WHO regional representative Dr Lo Ying-Ru Jacqueline stated that Malaysia has been acknowledged globally for its high-performing health system based on a well-trained workforce, excellent infrastructure and quality service delivery.

Since independence, infant death has fallen by more than 90% to 6.7 deaths per 1,000 live births in 2016. Maternal mortality has also decreased by 89% between 1963 and 2013.

Who are these “well-trained workforce”? Mostly “unemployable Malay graduates” from “uncompetitive universities” and other institutions.

Who are the members of “the liberal segment of the Malay society” who powered the industrial transformation of Malaysia?

Are they those who are blond and advocating “separation of religion and government; religion must be a private matter and kept private; take out religious education from the public arena”? Or those who call for recognition of homosexual, gay and lesbian rights; criminalisation of polygamy and decriminalisation of adultery; and free sex?

Sorry Siti, if there was any contribution from this deviant group, it was very minimal as many of them look to green pastures outside Malaysia and migrate. The rapid transformation of the Malaysian economy has been powered by patriotic devout Malay Muslims and the minorities, Chinese and Indians.

It is not the Malays who face a dilemma in engaging the modern world because their religion teaches them to seek success in this world and in the hereafter (Quran 2:201). It is Siti who faces a serious dilemma on whether to decolonise her thinking and become a true Malay Muslim or remain a Western secular clone.

By MOHD AZMI ABDUL HAMID President Malaysian Consultative Council of Islamic Organization

Endorsed by:

Syekh Ahmad Awang, chairman, International Union of Muslim Scholars Malaysia
Syekh Abdul Ghani Samsudin, chairman, Secretariat for the Assembly of Ulama of Asia
Assoc Prof Dr Roslan Mohd Nor, secretary-general, Ulama Association of Malaysia
Datin Ustazah Aminah Zakaria, chairperson, Persatuan Persaudaraan Muslimah Malaysia
Hj Baharudin Masrom, secretary, Kongres Ummah
Dr Mohamad Ali Hassan, committee member of SHURA
Prof Dr Rahmatullah Khan, committee of MaSSa
Dr Abdul Rahman Ahmad, committee of SUARA
Datuk Abdullah Mad Din, former director of Islamic Division, Ministry of Education
Datuk Hadzir Md Zain, former deputy director-general, Implementation Coordination Unit, JPM

Elaborating the dilemma in today’s terms

I REFER to the comments from the Malaysian Consultative Council of Islamic Organization in response to my latest column “The real Malay Dilemma” (The real Malay dilemma: race, religion & politics/Sunday Star, Aug 26).

Mine was an opinion piece. It seems the writer of the letter from the Malaysian Consultative Council of Islamic Organization and the characters endorsing it cannot differentiate between journalism and opinion. Having said that, whatever I say speak for itself.

Our former prime ministers Tunku Abdul Rahman, Tun Abdul Razak Hussein and Tun Hussein Onn were all secularists. Our present Prime Minister Tun Dr Mahathir Mohamad’s “Malay Dilemma” and what he continues to say today about how we Malays practise Islam still stands. I just elaborated the dilemma in today’s terms.

Is our Malay society not more insular or more superstitious than in the 80s? Ask yourselves. I won’t go into the nonsense and tahyul being preached on Malay sites that are popular today; let’s just look at the public universities that are managed and led by Malays. Did we use to have faculties in universities producing anti-hysteria kits or paranormal detection equipment or holding seminars on hell or how to interact with non-Muslims?

There’s a chief syariah judge proposing to have standard operating procedures for cases with “mystical elements”.

What is going on? Even in the 70s or 80s, such nonsense was unheard of among Malays leading our institutions.

Just reading the rants equating liberalism with perverts and everything to do with sex practically tells one of their mindset. They cannot escape from their dogmatic conservative religious notion of what makes a person a liberal.

They are intent on demonising liberalism so they can impose devoutness as they see it unto society.

Where were all these defenders of Islam and the Malays when our leaders were robbing the nation blind? Did we hear a peep from them?

I speak of leadership to change our society. I am so glad, in spite of the recalcitrant conservatives, that the Sultan of Selangor took the mantle of leadership and pronounced that the legal age of marriage be raised to 18 for Muslims. That is liberalism.

Only liberals have been calling for this to protect the childhood of our girls and to ensure they have the opportunity for education and a full life.

I am a Malay and a Muslim. I will speak up for the good of our society without fear or favour or intimidation. We need to face our demons and change to progress. Someone needs to tell the inconvenient truths.

By SITI KASSIM

National unity – an inconvenient truth?

Dear new government, if you continue to divide us, you will rue the day.

TWO events in recent days reminded me what is truly important to this nation.

The first was the National Day celebration on Friday in Putrajaya.

Although the euphoria over GE14 has waned, there was still enough to make me want to be part of the National Day celebration even if via my telly. So I did something I hadn’t done in years: got up early just to watch the parade.

The cameras at Dataran Putrajaya showed thousands of Malaysians who were more excited than me and had taken the trouble to line the thoroughfare to enjoy the spectacle and catch glimpses of members of the new Cabinet.

Indeed, it was deja vu to see Tun Dr Mahathir Mohamad as Prime Minister and Tun Dr Siti Hasmah Mohd Ali sitting with the Yang di-Pertuan Agong Sultan Muhammad V on the VIP grandstand.

It was also a touch surreal to see several faces we once thought impossible to see in such a setting – Cabinet members such as Datin Seri Dr Wan Azizah Wan Ismail, Gobind Singh Deo, Lim Guan Eng, Mohamed Sabu, M. Kulasegaran and Teresa Kok.

On the pavement, the opening and closing acts by flag-waving young Malaysians dancing in unison warmed the cockles of my heart.

I appreciated the effort to ensure all races were brought together to perform in a show of unity, emphasising the slogan: Sayangi Malaysiaku.

Yes, I do love my Malaysia, as do millions of others who were born and bred in this gracious, blessed land. That birthright is what unites us all.

And that is the key lesson to the well-being of our nation – unity.

Which leads me to the second event: the GE14-inspired movie, Rise: Ini Kalilah.

I caught it on Monday night and relived somewhat that incredible time when Malaysian history was made.

While not perfectly told and it is a story that only Malaysians can fully understand and appreciate, the movie has enough to keep its audience interested and it ultimately delivers the feel-good factor as it too reinforces the power of unity; that is, what can be achieved when enough citizens unite for a common cause.

Yet that power was never properly developed because it was politically inexpedient.

For its own political survival, especially after the 2008 GE, the Barisan Nasional government preferred to use race and religion to divide and rule the nation. That ultimately wreaked havoc on our interracial ties, as stated in local human rights group Pusat KOMAS’ Malaysia Racial Discrimination Report released in March this year.

National unity, as far can I can remember, was trotted out as important only after something bad had happened.

It took the terrible May 13, 1969, racial riots for the government to set up the National Unity Council.

The council was disbanded in 1971 and replaced by the National Unity Advisory Council, whose secretariats were the Department of National Unity and the National Muhibbah Office.

The two agencies were merged to form the National Unity Ministry in 1972. But it only lasted till 1974, when it was replaced by the National Unity Board.

The next time national unity took the spotlight was after GE13. The results showed the need to do something to reduce racial polarisation and to build a “united Malaysian nation”. That led to the formation of the National Unity Consultative Council in September 2013.

The NUCC held a series of meetings with agencies and NGOs to formulate a National Unity Blueprint. In 2014, it proposed three so-called Harmony Bills to replace the Sedition Act.

But the Act remained and the Bills became mired in controversy since they would make it mandatory for the government and all persons to promote equality and prohibit discrimination based on religion, race, birthplace, gender and disability. That was somehow anathema to the Malay agenda and the Bills went on the backburner.

It would appear the previous government saw the need for better national unity as an inconvenient truth and continued to use it for “display purposes only.”

So whither national unity in New Malaysia?

Political scientist Chandra Muzaffar, in criticising Pakatan for leaving it out in its election manifesto, wants the new government to make its stand known and emphasise the Rukunegara to show “it is serious and sincere about one of Malaysia’s foremost challenges but would have also demonstrated that it is crystal-clear about the direction we should take as a people.”

But others take a different view. Prolific online commentator T.K. Chua says: “What is the point of declaring unity as our goal when our policies, programmes and actions are doing just the opposite?”

He adds: “It is time to stop the endless declarations and slogans typical of a third world country. We can’t talk ourselves to national unity. National unity is the product of years of inclusive policies, programmes and actions.”

And that is what he wants to see in the Pakatan government – action, or in today’s jargon, walk the walk.

I take both views to be important: talk the talk and walk the walk. In our fractured nation, we sorely need to hear Pakatan leaders openly and loudly embrace national unity as a must-do KPI and then see them implement it in all their policies and actions for the long haul. Only then can we hold them to their words and judge them by their actions.

For now, Pakatan still seems dazed by its own victory and further stunned to find government machinery that Dr Mahathir says is broken.

If that is the case, Pakatan has the chance to rebuild the machinery that was abused by its predecessors and set it right. No more “divide and rule” but “one for all and all for one”!

By June H L Wong


Related posts:

The real Malay dilemma: race, religion & politics messed up!

Old politics: If the leadership keeps to the racialist, feudalist and religious-centric tactics and policies of the past, thinking this is what they need to do to keep the votes, it will just be the repeat of past mistakes of the Umno era.

New Malaysia should push for meritocracy

The Meritocracy Paradox

Malaysia sacrifices talent to keep one race on top, said Lee Kuan Yew of Singapore

Rocky times ahead for China FDI in Malaysia

Li: ‘Malaysia must remember that by targeting Chinese investors in an unreasonable way, this will scare away not only FDI from China, but also from other countries.’ - credit: Malaysia Today

Great wall of controversy: Dr Mahathir’s criticism of Alliance Steel’s barricade for its RM6bil integrated steel complex has upset some Chinese investors.

A series of attacks on China-funded projects in Malaysia by the Prime Minister is causing anxiety not only to Chinese nationals but also locals.

INVESTMENTS and mega contracts linked to China will have to brace for rocky times ahead if Prime Minister Tun Dr Mahathir Mohamad continues unchecked with his incessant tirade against Chinese endeavours in Malaysia.

The golden era for Chinese investments, which possibly peaked during the rule of former prime minister Datuk Seri Najib Razak, seems to have come to an unceremonious end.

The future of foreign direct investment (FDI) from China is now seen as unpredictable – at least for the next 3-5 years – under the new government of Dr Mahathir, according to Datuk Keith Li, president of China Entrepreneurs Association in Malaysia.

Li: ‘Malaysia must remember that by targeting Chinese investors in an unreasonable way, this will scare away not only FDI from China, but also from other countries.’

“The series of comments made on Chinese investments by the PM have affected the confidence of Chinese investors. Those who originally wanted to come are adopting a wait-and-see attitude, while those already in are careful about their expansion plans,” says Li in an interview with Sunday Star.

The outspoken leader of Chinese firms notes that businessmen from the mainland are “worried”, although some comments of the Prime Minister were later “clarified” by other Cabinet Ministers or the PM’s Office.

“Malaysia must remember that by targeting Chinese investors in an unreasonable way, this will scare away not only FDI from China, but also from other countries as well,” adds Li.

Since his five-day official visit to China that ended on Aug 21, the 93-year-old Malaysian leader has caused anxiety to all by making shocking announcements.

While summing up his China trip on Aug 21, he declared he would cancel the RM55bil East Coast Rail Link (ECRL) and two gas pipelines being built by Chinese firms.

As the ECRL is of strategic importance to China’s Belt and Road Initiative – the policy which Dr Mahathir has repeatedly voiced his support for, Beijing would expect a renegotiation of the contract terms rather than an outright cancellation.

Dr Mahathir had reasoned that with national debt of over RM1 trillion, Malaysia could not afford these projects. In addition, these contracts are tainted with unfair terms and smacked of high corruption.


Although the Prime Minister said Chinese leaders understood Malaysia’s situation, reactions of Chinese nationals on social media were unforgiving with many suspecting Dr Mahathir “has other motives”.

Many see Dr Mahathir as attempting to raise Malaysia’s bargaining power in the negotiation for compensation for the cancelled projects. China, according to social media talk, is asking for RMB50bil as compensation.

On social media, there are also suggestions that Dr Mahathir is aiming at his predecessor as most China-linked projects were launched during the rule of Najib.

During the rule of Najib, Malaysia-China relations were intimate.

This has resulted in the influx of major construction and property companies from the mainland, followed by banks and industries.

But on May 9, Dr Mahathir’s Pakatan Harapan coalition toppled the Barisan Nasional government of Najib after the most bitterly fought general election in local history.

The second-time premier has put the blame on Najib for the massive 1MDB financial scandal, which Najib has denied, and mismanagement of the country’s finance.

And while the Chinese nationals are all riled up by the cancellation of ECRL, Dr Mahathir came up with an ill-advised statement.

Last week he ordered a wall surrounding Alliance Steel, which is investing US$1.4bil (RM6bil) for a massive steel complex, to be demolished. This was seen as unreasonably targeting a genuine FDI.

Although the foreign ministry later clarified that the leader had mistaken the wall to be built around the Malaysia-China Kuantan Industrial Park (MCKIP), the anger of Chinese nationals lingers on.

The industrial park is a G-to-G project to jointly promote bilateral investments. There is an even bigger sister industrial park in China that houses many Malaysian firms. All these were built during Najib’s reign.

Dr Mahathir’s statement has also caught the attention of China’s Global Times, the mouthpiece of the Communist Party of China.

In an editorial on Aug 28, the news portal warned: “Many words of Kuala Lumpur can spread to China via the Internet, causing different reactions. How the Chinese public sees China-Malaysia cooperation is by no means inconsequential to Malaysia’s interests.”

It noted “while Dr Mahathir advocates pursuing a policy of expanding friendly cooperation with China ... but when it comes to specific China-funded projects, his remarks gave rise to confusion. Like this time, it is startling to equate the controversy surrounding a factory wall with state sovereignty.”

Global Times added: “When such remarks are heard by Chinese people, the latter find it piercing. They will definitely make Chinese investors worry about Malaysian public opinion and whether such an atmosphere will affect investment in the country.”

In fact, it would be unwise for the government to disrupt MCKIP. Co-owned by Chinese, IJM Corporation and Pahang government, this industrial park has lured in Chinese FDI of over RM20bil.

It is an important economic driver in the East Coast and has aimed to create 19,000 jobs by 2020.

While the “wall” statement might be seen as a minor mistake, Dr Mahathir’s flawed announcement last Monday that foreigners would be barred from buying residential units in the US$100bil (RM410bil) Forest City stirred another uproar.

On Aug 27, Reuters quoted Dr Mahathir as saying: “That city that is going to be built cannot be sold to foreigners. Our objection is because it was built for foreigners, not built for Malaysians. Most Malaysians are unable to buy those flats.”

Currently being developed by Country Garden Holdings of China, this 20-year long project, built on reclaimed land in Johor Bahru, aims to house 700,000 people. As about 70% of the house buyers are Chinese, some locals fear this could turn into a China town.

Unlike Alliance Steel that has stayed silent, Country Garden fought back by seeking clarifications from the PM’s Office.

In a statement, the major Chinese developer said all its property transactions had complied with Malaysian laws.

Citing Section 433B of the National Land Code, it added a foreign citizen or a foreign company may acquire land in Malaysia subject to the prior approval of the State Authority.

In addition, it said Dr Mahathir’s comment did not correspond with the content of the meeting he had with Country Garden founder and chairman Yeung Kwok Keung on Aug 16.

During the meeting, Dr Mahathir said he welcomed foreign investments which could create job opportunities, promote technology transfer and innovations.

In fact, this forest city project – along with ECRL – were the main targets of attack by Dr Mahathir before the May 9 election.

Opposition to these projects had helped drive Dr Mahathir’s election campaign, during which he said was evidence of Najib selling Malaysia’s sovereignty to China.

These projects, together with major construction contracts won by Chinese and the inflow of industrial investments, place the total value of Chinese deals at more than RM600bil in Malaysia.

But few would expect Dr Mahathir to use his powerful position to resume his attacks on China-linked projects so soon after his so-called “fruitful visit” to Beijing.

During his official visit to Beijing, the Malaysian leader was accorded the highest honour by China, due mainly to respect for “China’s old friend” and strong Malaysia-China relations built since 1975.

Dr Mahathir was chauffeured in Hongqi L5 limousine, reserved for the most honourable leaders, and greeted in an official welcome ceremony by Premier Li Keqiang. He was also guest of honour at a banquet at Diaoyutai State Guesthouse hosted by President Xi Jinping.

But beneath these glamorous receptions, there were reservations exuded by the Chinese for this leader whose premiership is scheduled to end in two years.

There were no exciting business deals signed in Beijing. There was absence of high diplomatic rhetoric that “Malaysia-China ties have been elevated to another historic high”, oft-repeated during Najib’s past visits.

Many even notice that Premier Li and Dr Mahathir had a cool handshake after their short joint press conference in Beijing.

And although China promised to buy Malaysian palm oil, the statement was qualified with “price sensitivity”, which means it will not buy above market price.

In addition, there was no mention of “buying palm oil without upper limit”, which was promised to Najib last year.

If Dr Mahathir’s original intention was to target Forest City and its owners, his move has certainly backfired. The country will have to pay a price for his off-the-cuff statement.

The “new policy” will have serious ramifications as it would hit the value of the properties not only in Forest City but also in other China-linked and non-Chinese projects.

Country Garden’s Danga Bay project will also be hit. It now faces a more daunting task of selling the balance of about 2,000 units in Danga Bay, according to a Starbiz report.

Other Chinese developers like R&F Princess Cove and Greenland Group will be affected.

VPC Alliance Malaysia managing director James Wong told Starbiz there may be legal suits against the government.

“That may force Country Garden to scale down because it has invested a lot with its industrial building systems factory and an international school, among other investments. It will impact Country Garden and Malaysia’s property sector negatively,” Wong said.

“Foreign buyers and other foreign companies will shy away,” Wong added.

The change in government and the insensitive comments on China-funded projects have turned Malaysia into a high-risk investment destination for the Chinese, according to Li.

“We don’t know which China projects will be targeted next. Looking back, it’s a blessing in disguise that we were pushed out of the RM200bil Bandar Malaysia project. It is also lucky that Chinese money has not gone into the RM30bil Melaka Gateway project,” says Li, who owns a travel agency in Malaysia.

“In the immediate future, more tourists from China are likely to shy away from Malaysia.

“Malaysia may not hit the target of having three million visits from China this year,” Li adds.

Credit: Ho Wah Foon The Star

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Rocky times ahead for China FDI in Malaysia

Li: ‘Malaysia must remember that by targeting Chinese investors in an unreasonable way, this will scare away not only FDI from China, but also from other countries.’ - credit: Malaysia Today

Great wall of controversy: Dr Mahathir’s criticism of Alliance Steel’s barricade for its RM6bil integrated steel complex has upset some Chinese investors.

A series of attacks on China-funded projects in Malaysia by the Prime Minister is causing anxiety not only to Chinese nationals but also locals.

INVESTMENTS and mega contracts linked to China will have to brace for rocky times ahead if Prime Minister Tun Dr Mahathir Mohamad continues unchecked with his incessant tirade against Chinese endeavours in Malaysia.

The golden era for Chinese investments, which possibly peaked during the rule of former prime minister Datuk Seri Najib Razak, seems to have come to an unceremonious end.

The future of foreign direct investment (FDI) from China is now seen as unpredictable – at least for the next 3-5 years – under the new government of Dr Mahathir, according to Datuk Keith Li, president of China Entrepreneurs Association in Malaysia.

Li: ‘Malaysia must remember that by targeting Chinese investors in an unreasonable way, this will scare away not only FDI from China, but also from other countries.’

“The series of comments made on Chinese investments by the PM have affected the confidence of Chinese investors. Those who originally wanted to come are adopting a wait-and-see attitude, while those already in are careful about their expansion plans,” says Li in an interview with Sunday Star.

The outspoken leader of Chinese firms notes that businessmen from the mainland are “worried”, although some comments of the Prime Minister were later “clarified” by other Cabinet Ministers or the PM’s Office.

“Malaysia must remember that by targeting Chinese investors in an unreasonable way, this will scare away not only FDI from China, but also from other countries as well,” adds Li.

Since his five-day official visit to China that ended on Aug 21, the 93-year-old Malaysian leader has caused anxiety to all by making shocking announcements.

While summing up his China trip on Aug 21, he declared he would cancel the RM55bil East Coast Rail Link (ECRL) and two gas pipelines being built by Chinese firms.

As the ECRL is of strategic importance to China’s Belt and Road Initiative – the policy which Dr Mahathir has repeatedly voiced his support for, Beijing would expect a renegotiation of the contract terms rather than an outright cancellation.

Dr Mahathir had reasoned that with national debt of over RM1 trillion, Malaysia could not afford these projects. In addition, these contracts are tainted with unfair terms and smacked of high corruption.


Although the Prime Minister said Chinese leaders understood Malaysia’s situation, reactions of Chinese nationals on social media were unforgiving with many suspecting Dr Mahathir “has other motives”.

Many see Dr Mahathir as attempting to raise Malaysia’s bargaining power in the negotiation for compensation for the cancelled projects. China, according to social media talk, is asking for RMB50bil as compensation.

On social media, there are also suggestions that Dr Mahathir is aiming at his predecessor as most China-linked projects were launched during the rule of Najib.

During the rule of Najib, Malaysia-China relations were intimate.

This has resulted in the influx of major construction and property companies from the mainland, followed by banks and industries.

But on May 9, Dr Mahathir’s Pakatan Harapan coalition toppled the Barisan Nasional government of Najib after the most bitterly fought general election in local history.

The second-time premier has put the blame on Najib for the massive 1MDB financial scandal, which Najib has denied, and mismanagement of the country’s finance.

And while the Chinese nationals are all riled up by the cancellation of ECRL, Dr Mahathir came up with an ill-advised statement.

Last week he ordered a wall surrounding Alliance Steel, which is investing US$1.4bil (RM6bil) for a massive steel complex, to be demolished. This was seen as unreasonably targeting a genuine FDI.

Although the foreign ministry later clarified that the leader had mistaken the wall to be built around the Malaysia-China Kuantan Industrial Park (MCKIP), the anger of Chinese nationals lingers on.

The industrial park is a G-to-G project to jointly promote bilateral investments. There is an even bigger sister industrial park in China that houses many Malaysian firms. All these were built during Najib’s reign.

Dr Mahathir’s statement has also caught the attention of China’s Global Times, the mouthpiece of the Communist Party of China.

In an editorial on Aug 28, the news portal warned: “Many words of Kuala Lumpur can spread to China via the Internet, causing different reactions. How the Chinese public sees China-Malaysia cooperation is by no means inconsequential to Malaysia’s interests.”

It noted “while Dr Mahathir advocates pursuing a policy of expanding friendly cooperation with China ... but when it comes to specific China-funded projects, his remarks gave rise to confusion. Like this time, it is startling to equate the controversy surrounding a factory wall with state sovereignty.”

Global Times added: “When such remarks are heard by Chinese people, the latter find it piercing. They will definitely make Chinese investors worry about Malaysian public opinion and whether such an atmosphere will affect investment in the country.”

In fact, it would be unwise for the government to disrupt MCKIP. Co-owned by Chinese, IJM Corporation and Pahang government, this industrial park has lured in Chinese FDI of over RM20bil.

It is an important economic driver in the East Coast and has aimed to create 19,000 jobs by 2020.

While the “wall” statement might be seen as a minor mistake, Dr Mahathir’s flawed announcement last Monday that foreigners would be barred from buying residential units in the US$100bil (RM410bil) Forest City stirred another uproar.

On Aug 27, Reuters quoted Dr Mahathir as saying: “That city that is going to be built cannot be sold to foreigners. Our objection is because it was built for foreigners, not built for Malaysians. Most Malaysians are unable to buy those flats.”

Currently being developed by Country Garden Holdings of China, this 20-year long project, built on reclaimed land in Johor Bahru, aims to house 700,000 people. As about 70% of the house buyers are Chinese, some locals fear this could turn into a China town.

Unlike Alliance Steel that has stayed silent, Country Garden fought back by seeking clarifications from the PM’s Office.

In a statement, the major Chinese developer said all its property transactions had complied with Malaysian laws.

Citing Section 433B of the National Land Code, it added a foreign citizen or a foreign company may acquire land in Malaysia subject to the prior approval of the State Authority.

In addition, it said Dr Mahathir’s comment did not correspond with the content of the meeting he had with Country Garden founder and chairman Yeung Kwok Keung on Aug 16.

During the meeting, Dr Mahathir said he welcomed foreign investments which could create job opportunities, promote technology transfer and innovations.

In fact, this forest city project – along with ECRL – were the main targets of attack by Dr Mahathir before the May 9 election.

Opposition to these projects had helped drive Dr Mahathir’s election campaign, during which he said was evidence of Najib selling Malaysia’s sovereignty to China.

These projects, together with major construction contracts won by Chinese and the inflow of industrial investments, place the total value of Chinese deals at more than RM600bil in Malaysia.

But few would expect Dr Mahathir to use his powerful position to resume his attacks on China-linked projects so soon after his so-called “fruitful visit” to Beijing.

During his official visit to Beijing, the Malaysian leader was accorded the highest honour by China, due mainly to respect for “China’s old friend” and strong Malaysia-China relations built since 1975.

Dr Mahathir was chauffeured in Hongqi L5 limousine, reserved for the most honourable leaders, and greeted in an official welcome ceremony by Premier Li Keqiang. He was also guest of honour at a banquet at Diaoyutai State Guesthouse hosted by President Xi Jinping.

But beneath these glamorous receptions, there were reservations exuded by the Chinese for this leader whose premiership is scheduled to end in two years.

There were no exciting business deals signed in Beijing. There was absence of high diplomatic rhetoric that “Malaysia-China ties have been elevated to another historic high”, oft-repeated during Najib’s past visits.

Many even notice that Premier Li and Dr Mahathir had a cool handshake after their short joint press conference in Beijing.

And although China promised to buy Malaysian palm oil, the statement was qualified with “price sensitivity”, which means it will not buy above market price.

In addition, there was no mention of “buying palm oil without upper limit”, which was promised to Najib last year.

If Dr Mahathir’s original intention was to target Forest City and its owners, his move has certainly backfired. The country will have to pay a price for his off-the-cuff statement.

The “new policy” will have serious ramifications as it would hit the value of the properties not only in Forest City but also in other China-linked and non-Chinese projects.

Country Garden’s Danga Bay project will also be hit. It now faces a more daunting task of selling the balance of about 2,000 units in Danga Bay, according to a Starbiz report.

Other Chinese developers like R&F Princess Cove and Greenland Group will be affected.

VPC Alliance Malaysia managing director James Wong told Starbiz there may be legal suits against the government.

“That may force Country Garden to scale down because it has invested a lot with its industrial building systems factory and an international school, among other investments. It will impact Country Garden and Malaysia’s property sector negatively,” Wong said.

“Foreign buyers and other foreign companies will shy away,” Wong added.

The change in government and the insensitive comments on China-funded projects have turned Malaysia into a high-risk investment destination for the Chinese, according to Li.

“We don’t know which China projects will be targeted next. Looking back, it’s a blessing in disguise that we were pushed out of the RM200bil Bandar Malaysia project. It is also lucky that Chinese money has not gone into the RM30bil Melaka Gateway project,” says Li, who owns a travel agency in Malaysia.

“In the immediate future, more tourists from China are likely to shy away from Malaysia.

“Malaysia may not hit the target of having three million visits from China this year,” Li adds.

Credit: Ho Wah Foon The Star

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Foreigners Not Welcome as Malaysia Joins Property Clampdown

Malaysia Bans Foreigners From Project https://www.bloomberg.com/news/videos/2018-08-28/malaysia-bans-foreigners-from-project-video ..

ECRL and pipeline projects cancelled !

https://youtu.be/NyNXOirQ2F0 https://youtu.be/nyQIyNLQ4-o https://youtu.be/7zyP1xE9glo It added to the country's debts and ..

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SST - for better or worse ?

What is Sales & Service Tax (SST) in Malaysia? - SST Malaysia

Today, the Sales and Service Tax (SST) makes a comeback on our tax radar screen to replace the three years and two months old Goods and Services Tax (GST), which was implemented on April 1, 2015.

The abolition of the GST and replaced with SST is an election promise of the Pakatan Harapan manifesto.

It has been claimed that the GST is a regressive broad-based consumption tax that has burdened the low- and middle-income households amid the rising cost of living. The multi-stage tax levied on supply chains also caused cascading cost and price effects on goods and services. That said, the Finance Minister has acknowledged that the GST is an efficient and transparent tax.

Following the implementation of the SST, the Government will come to terms that the budget spending will have to be rationalised and realigned with the lower revenue collection from the SST to keep the lower budget deficit target on track.

The expected revenue collection from SST is RM21bil compared to an average of RM42.7bil per year in 2016-17 from GST.

During the period 2010-2014, the revenue collection from the SST, averaging RM14.8bil per year (the largest amount collected on record was RM17.2bil in 2014), of which 64% was contributed by the sales tax rate of 10% while the balance 36% from the service tax of 6%.

Faced with the revenue shortfall, the Government expects cost-savings, plugging of leakages, weeding out of corruption as well as the containment of the costs of projects would help to balance the financing gap between revenue and spending.

The sales tax rate (0%, 10% and 5% as well as a specific rate for petroleum) and service tax of 6% is imposed on consumers who use certain prescribed services. The taxable threshold for SST is set at annual revenue of RM500,000, the same threshold as GST, with the exception for eateries and restaurants at RM1.5mil.

As SST is levied only at a single stage of the supply chain, that is at the manufacturers or importers level and NOT at wholesalers, retailers and final consumers, it has cut off the number of registered tax persons and establishments from 476,023 companies under GST as of 15 July to an estimated 100,405 under SST.

The smaller number of registered establishments means no more compliance cost to about 85% of traders.

The distributive traders (wholesalers and retailers) will be hassle-free from cash flow problems, as they are no longer required to submit GST output tax while waiting to claim back the GST input tax. During GST, many traders imputed refunds into their pricing because of the delay in GST refunds. This was partly blamed for the cascading cost pass-through and price increases onto consumers.

For SST, 38% of the goods and services in the Consumer Price Index (CPI) basket are taxable compared to 60% under the GST.

It is estimated that up to RM70bil will be freed up to allow consumers to spend more.

Expanded scope

The proposed service tax regime has a narrower base (43.5% of services is taxable) compared to the GST (64.8% of services is taxable).

Medical insurance for individuals, service charges from hotel, clubs and restaurants as well as household’s electricity usage between 300kWh and 600kWh are not taxable. However, the scope of the new SST has been expanded compared to the previous SST. Among them are gaming, domestic flights (excluding rural air services), IT services, insurance and takaful for individuals, more telecommunication services and preparation of food and beverage services as well as electricity supply (household usage above 600kWh).

For hospitality services, the proposed service tax lowered the registration threshold of general restaurants (not attached with hotel) from an annual revenue of RM3mil under old service tax regime to RM1.5mil, resulting in expanded coverage of more restaurants.

Private hospital services will be excluded under the new SST regime.

How does SST affect consumers?

Technically speaking, the revenue shortfall of RM23bil between SST and GST is a form of “income transfer” from the Government to households and businesses. This is equivalent to tax cuts to support consumer spending.

Will it lead to higher consumer prices?

The contentious issue is will the SST burden households more than that of the GST? It must be noted that the cost of living not only encompasses prices paid for goods and services but also housing, transportation, medical and other living expenses.

The degree of sales tax impact would depend on the cost and margin (mark-up) of businesses along the supply chain before reaching end-consumers.

The coverage and scope of tax imposed also matter.

As the price paid by consumers is embedded in the selling price, this gives rise to psychology effect that sales tax is somewhat better off than GST.

The good news to consumers is that 38% of the goods and services in the Consumer Price Index (CPI) basket are taxable compared to the 60% under the GST.

Technically speaking, monthly headline inflation, as measured by the Consumer Price Index, is likely to show a flat growth or even declines in the months ahead.

It must be noted that consumers should compare prices before GST versus the three-month tax holiday (June-August).

Generally, consumers perceived that prices should either come down or remained unchanged as the sales tax is levied on manufacturers.

On average, some items (electrical appliances and big ticket items such as cars) would be costlier when compared to GST and some may come down (new items exempted from SST).

Nevertheless, we caution that consumers may experience some price increases, as prices generally did not come as much following the removal of GST in June.

There are concerns that prices may still go up in September when the new SST kicks in as irresponsible traders may take advantage to increase prices further.

Household consumption, which got a big boost during the three-month tax holiday in June-August, could see some normalisation in spending.

The smooth implementation of the new SST, accompanied by strict enforcement of price checks and the curbing of profiteering, especially for essentials goods and services consumed by B40 income households, are crucial to keep the level of general prices stable.

Strong consumer activism with the support of The Federation of Malaysian Consumers Association and the Consumers Association Penang as well as the media must work together to help in price surveillance and protect consumers’ interest.

Credit to Lee Heng Guie - comment

Related post:

GST vs SST. Which is better?

 

SST - for better or worse ?

What is Sales & Service Tax (SST) in Malaysia? - SST Malaysia

Today, the Sales and Service Tax (SST) makes a comeback on our tax radar screen to replace the three years and two months old Goods and Services Tax (GST), which was implemented on April 1, 2015.

The abolition of the GST and replaced with SST is an election promise of the Pakatan Harapan manifesto.

It has been claimed that the GST is a regressive broad-based consumption tax that has burdened the low- and middle-income households amid the rising cost of living. The multi-stage tax levied on supply chains also caused cascading cost and price effects on goods and services. That said, the Finance Minister has acknowledged that the GST is an efficient and transparent tax.

Following the implementation of the SST, the Government will come to terms that the budget spending will have to be rationalised and realigned with the lower revenue collection from the SST to keep the lower budget deficit target on track.

The expected revenue collection from SST is RM21bil compared to an average of RM42.7bil per year in 2016-17 from GST.

During the period 2010-2014, the revenue collection from the SST, averaging RM14.8bil per year (the largest amount collected on record was RM17.2bil in 2014), of which 64% was contributed by the sales tax rate of 10% while the balance 36% from the service tax of 6%.

Faced with the revenue shortfall, the Government expects cost-savings, plugging of leakages, weeding out of corruption as well as the containment of the costs of projects would help to balance the financing gap between revenue and spending.

The sales tax rate (0%, 10% and 5% as well as a specific rate for petroleum) and service tax of 6% is imposed on consumers who use certain prescribed services. The taxable threshold for SST is set at annual revenue of RM500,000, the same threshold as GST, with the exception for eateries and restaurants at RM1.5mil.

As SST is levied only at a single stage of the supply chain, that is at the manufacturers or importers level and NOT at wholesalers, retailers and final consumers, it has cut off the number of registered tax persons and establishments from 476,023 companies under GST as of 15 July to an estimated 100,405 under SST.

The smaller number of registered establishments means no more compliance cost to about 85% of traders.

The distributive traders (wholesalers and retailers) will be hassle-free from cash flow problems, as they are no longer required to submit GST output tax while waiting to claim back the GST input tax. During GST, many traders imputed refunds into their pricing because of the delay in GST refunds. This was partly blamed for the cascading cost pass-through and price increases onto consumers.

For SST, 38% of the goods and services in the Consumer Price Index (CPI) basket are taxable compared to 60% under the GST.

It is estimated that up to RM70bil will be freed up to allow consumers to spend more.

Expanded scope

The proposed service tax regime has a narrower base (43.5% of services is taxable) compared to the GST (64.8% of services is taxable).

Medical insurance for individuals, service charges from hotel, clubs and restaurants as well as household’s electricity usage between 300kWh and 600kWh are not taxable. However, the scope of the new SST has been expanded compared to the previous SST. Among them are gaming, domestic flights (excluding rural air services), IT services, insurance and takaful for individuals, more telecommunication services and preparation of food and beverage services as well as electricity supply (household usage above 600kWh).

For hospitality services, the proposed service tax lowered the registration threshold of general restaurants (not attached with hotel) from an annual revenue of RM3mil under old service tax regime to RM1.5mil, resulting in expanded coverage of more restaurants.

Private hospital services will be excluded under the new SST regime.

How does SST affect consumers?

Technically speaking, the revenue shortfall of RM23bil between SST and GST is a form of “income transfer” from the Government to households and businesses. This is equivalent to tax cuts to support consumer spending.

Will it lead to higher consumer prices?

The contentious issue is will the SST burden households more than that of the GST? It must be noted that the cost of living not only encompasses prices paid for goods and services but also housing, transportation, medical and other living expenses.

The degree of sales tax impact would depend on the cost and margin (mark-up) of businesses along the supply chain before reaching end-consumers.

The coverage and scope of tax imposed also matter.

As the price paid by consumers is embedded in the selling price, this gives rise to psychology effect that sales tax is somewhat better off than GST.

The good news to consumers is that 38% of the goods and services in the Consumer Price Index (CPI) basket are taxable compared to the 60% under the GST.

Technically speaking, monthly headline inflation, as measured by the Consumer Price Index, is likely to show a flat growth or even declines in the months ahead.

It must be noted that consumers should compare prices before GST versus the three-month tax holiday (June-August).

Generally, consumers perceived that prices should either come down or remained unchanged as the sales tax is levied on manufacturers.

On average, some items (electrical appliances and big ticket items such as cars) would be costlier when compared to GST and some may come down (new items exempted from SST).

Nevertheless, we caution that consumers may experience some price increases, as prices generally did not come as much following the removal of GST in June.

There are concerns that prices may still go up in September when the new SST kicks in as irresponsible traders may take advantage to increase prices further.

Household consumption, which got a big boost during the three-month tax holiday in June-August, could see some normalisation in spending.

The smooth implementation of the new SST, accompanied by strict enforcement of price checks and the curbing of profiteering, especially for essentials goods and services consumed by B40 income households, are crucial to keep the level of general prices stable.

Strong consumer activism with the support of The Federation of Malaysian Consumers Association and the Consumers Association Penang as well as the media must work together to help in price surveillance and protect consumers’ interest.

Credit to Lee Heng Guie - comment

Related post:

GST vs SST. Which is better?