FINANCE Minister Lim Guan Eng said he hopes to meet the Federation of Malaysian Manufacturers (FMM) to understand the results of its recent survey, which found that 85% of local businesses have experienced an increase in production costs since the implementation of the Sales and Services Tax (SST).

The survey found that 42% of local businesses saw less than 5% increment in production costs, 34% experienced 5% to 10% increase in costs, and 7% faced more than 10% in additional costs. Only 15% of respondents did not see changes in costs.

Lim said he was willing to meet FMM to understand the reasons and source of the price increase, adding that the survey appeared to contradict figures derived by Putrajaya, which have shown a drop in most prices.

“We want to, of course, understand more closely from businesses and the complaints of higher production costs, because as I said, these are not explained by facts or statistics and figures,” Lim told reporters today.

“So, I will meet them soon to understand and, of course, if there are any complaints on implementation, I’m sure there are some teething problems that we can sort out.”

Earlier, Lim admitted that he was aware of “problems” with the SST system due to the speed of its implementation in September to replace the unpopular Goods and Services Tax (GST).

“We don’t deny that there are problems in terms of the rapid implementation of the SST. We implemented a completely new tax in less than two months,” he said.

“But I think we have fulfilled our objective in ensuring that the price increase, the impact of price increase, is less compared to GST. There will be, but the impact will be less than the GST and it’s proven.”

He noted that the inflation rate for 2018 was only 1%, compared to the 3.7% in 2017 during the implementation of GST.

In December, inflation stood at 0.2%, said Lim.

“So, I am willing to meet the FMM to see where is the source of the complaints of price increase.

“Because it’s not explained by facts and the figures provided by the Department of Statistics, and this is the same set of figures that was used by the previous government.”

Lim said he has held 18 dialogues throughout the country to resolve complaints by local businesses.

“We have resolved many of the issues… I believe if there are any issues it can be ironed out.

“(But) I insist that the facts and figures speak for themselves.”

The Business Conditions Survey by the FMM and the Malaysian Institute of Economic Research (MIER) found that the main factor for the higher costs, according to 36% of respondents, was that the SST rate on raw materials, components and services was higher than GST. – February 28, 2019.