Malaysia is delaying a planned expansion of its sales and service tax (SST), providing a reprieve for manufacturers bracing for higher US tariffs.
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The planned widening of the tax base, originally due on May 1, will be implemented at a later date, a spokesperson from the Ministry of Finance said in a text message.
Manufacturers have been urging the government to refrain from adding to their tax burdens this year after the US threatened a 24 per cent tariff on the Southeast Asian country. The sector, a major contributor to the nation’s tax revenue, is under severe cost pressure, Soh Thian Lai, president of the Federation of Malaysian Manufacturers, said earlier this month.
The delay in the move “will provide some relief for businesses already grappling with the uncertainty caused by US tariff policy,” said Khoon Goh, head of Asia research at Australia & New Zealand Banking Group. “While this means that the additional tax revenue from the SST expansion will be put off, the bigger concern at present is the growth impact rather than the government’s finances.”
Malaysia’s ringgit rose 0.7 per cent against the dollar to its strongest level since October as of 11.15am in Kuala Lumpur, the best performer among Asian currencies after the Thai baht.
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Other Southeast Asian countries are also seeking to mitigate the impact of the trade war on their economies.