GEORGE TOWN: It's the "USD", not "GST" which is giving most businesses a headache these days.
A chat with a number of them from Penang and Sabah showed that they were more concerned about the strengthening of the greenback and not the GST (Goods and Services Tax).
Penang Importers and Exporters Association (PIEA) president Ng Hooi Lai believed that the GST was only a minor factor in the estimated drop in sales, saying that the main issue was the weak ringgit.
"For example, manufacturers who have to import raw materials from other countries would suffer from higher costs.
"The government policy also does not allow price hikes, thus posing a greater burden on manufacturers and importers," he claimed.
He also cited the value of the yuan which had contributed to their plight.
"Just months ago, RM1 (S$ 0.40) here equalled to 3.50 yuan (S$ 0.80).
"Now it is 1.60 yuan," he said when contacted.
Ng said the issue would be discussed during PIEA's annual general meeting next week on ways to solve or cushion the problem.
In Kota Kinabalu, the weakening of the ringgit is giving heartaches to Sabah industries and manufacturers although tourism players are expected to gain more in view of a better exchange rate in favour of foreign travellers.
Kota Kinabalu Chinese Chamber of Commerce chairman Datuk Michael Lui said Sabah consumers would feel the direct effect of a lower value of the ringgit with more expensive imported manufactured goods and food products.
"However, these constitute less than 24 per cent of Sabah's imports according to 2013 statistics," he said.
Lui noted that more than 50 per cent of the state's imports comprised tools such as machinery, transport equipment chemicals, fuel and lubricants that were meant largely for industries.
"The figures tell the story. Consumers here are not that much affected by the drop in the ringgit value," he claimed.
However, he said the industries were the ones feeling the pinch as the material they had to import were now more costly because of the weaker ringgit.
He said the lower ringgit value would benefit Sabah's tourism industry as the sector was one of the major income earners in Sabah.
"With a better currency exchange, Sabah becomes cheaper to visit and thus more attractive for tourists," Lui added.