UNLIKE big businesses, small businesses are shutting down due to higher costs from the goods and services tax (GST) and minimum wage structure, Dr Mahathir Mohamad said today.

“GST’s impact is very, very tough (on the people and businesses). Production costs of goods (and services) have increased… (This is because) it takes months for businesses to claim back the GST they paid, so they need to raise prices to cope,” said the former prime minister in a session on cost of living on Facebook Live, today.

The Bersatu chairman said the minimum wage was also a bane to small businesses.

“Big businesses can streamline their operations to be more efficient but for small businesses like the tom yam shop and bicycle shop, they cannot afford to raise their workers’ wages; maybe they will have to close shop.

“As a result, not only will the owners of small businesses lose their income, the workers will also lose their jobs.”

Dr Mahathir said those doing business were in a bind as any price increase on their part meant they could lose their customers in the current economic climate. 

When production costs were up, businesses needed to ensure that productivity also rose, otherwise they could not keep afloat.

The Malay Chamber of Commerce last year complained to The Malaysian Insight that the GST had caused many businesses to close shop, but did not say how many.

Second Finance Minister Johari Abdul Ghani told Parliament last November that the federal government was investigating the matter.

Putrajaya introduced the minimum wage in 2012 and the GST in April 2015. 

Dr Mahathir was prime minister from 1981 to 2003.

In the 25-minute session on policy, Dr Mahathir reiterated PH’s promise to increase the number of scholarships, strengthen domestic investments and ensure foreign investments did not take place at the  at the expense of national interests.

The Malaysian Insight reported in January that foreign ownership of share capital in Malaysia had increased from 30.1% in 2006 to 37.9% in 2008. Numbers were no longer made public after that year.

Economist Jomo Kwame Sundram had said the high foreign ownership of Malaysian equity brought to mind the last days of British colonialism and did not bode well for the country.

“If you have more foreigners owning capital then more of the money made in Malaysia is taken out of the country. It’s not funnelled back into the nation’s income,” the former United Nations assistant secretary-general said.  – March 7, 2018.