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SINGAPORE – The share of consumer spending in Malaysia is high, as domestic spending increases after Mahathir Mohamad's government effectively abolished the goods and services tax in June by reducing it from 6% to 0%.
The wind can only remain until September, when an alternative tax will be introduced, and market players will likely become increasingly cautious about Malaysian equities.
The revocation of the GST was one of the many promises of Mahathir. Between May 9 and July 19, the shares of Aeon Co. (M) and Padini Holdings clothing company increased by more than 10% and 30%, respectively. British American Tobacco Malaysia shares jumped by nearly 50% over the same period
which contrasts with the benchmark FTSE Bursa Malaysia Kuala Lumpur index which fell by almost 5% due to the Uncertainty of the new government and the deterioration of the external environment
The abolition of the GST, as well as the holiday sales that followed the holy month of Ramadan, attracted many retailers in June. Tan Hai Hsin, general manager of research firm Retail Group Malaysia, said the elimination of the tax had allowed some companies to achieve a significant increase in their sales compared to the previous year's holidays.
. particularly well. In June, RGM increased its retail sales forecast from 4.7% to 5.3% from one year to the next
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However , the positive numbers were largely attributed
The new government must urgently resolve a number of tax problems after former Prime Minister Najib Razak revealed revelations about the scale of the off balance sheet debt.
] The Mahathir administration plans to reintroduce the sales and services tax – which was replaced by the GST in 2014 – in September to try to fill the hole in tax revenues.
But only a relatively small number of items are subject to the new tax. The burden on consumers is expected to be about $ 22.1 billion ($ 5.46 billion) less than it was at the time of collecting the GST, according to an estimate based on data dating back four and a half years.
spending cuts that he intends to make following the review of investment plans in infrastructure, resulting in a decline in the shares of construction and construction companies. other related stocks
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