FINANCE Minister Lim Guan Eng said yesterday he will respond in a fortnight to requests from the Association of Marine Industries Malaysia (Amim) that the industry be exempted from the 10% service tax.

Representatives from the association told Lim at a sales and service tax (SST) briefing in Kuching last night that the service tax would “just kill” Malaysia’s shipbuilding and ship repair industry as it would make them uncompetitive.

Amim said the industry is still recovering from the recent downturn and a service tax would just pile misery on shipbuilder, ship repair and oil and gas structure fabricator members.

They are competing against their zero-rated regional peers. The bulk of Amim’s members are in Sarawak, primarily Sibu and Miri.

They build a range of water craft from fishing to tug boats, barges, oil and gas support vessels to the ubiquitous Sg Rajang express boats.

“It (the tax) will have a big impact on us,” the representatives said on the RM40 billion industry.

“Ship companies and ship owners would be tempted to go to cheaper neighbours if we become expensive,” they said.

The association did not name which neighbouring countries but it is generally believed to be Singapore, which is a leading oil and gas marine structure fabricator in this part of the world, and Vietnam.

Lim also promised Weida, the manufacturer of high density polyethylene (HDPE) water tanks, a decision on its service tax exemption in two weeks.

HDPE water tanks – a favourite item distributed by the previous Barisan Nasional government prior to any election – is crucial in Sarawak’s rural areas without piped water.

In Sarawak, they are simply called the “blue tanks” because the tanks are often painted in BN’s blue.

Lee Choon Chin, Weida group executive chairman, said it does not make sense that the “cheaper” HDPE water tanks are not granted an exemption from the 10% service tax when the “more costly” stainless steel tanks are.

He told Lim that the situation is akin to giving imported abalone an exemption but not the locally caught ikan kembung (mackerel).

Lee said Weida, the largest manufacturer of such tanks in Sarawak, produces 150,000 units annually and the tax could make them out of reach for the rural poor. – September 6, 2018.