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Malaysia’s newly elected government on 16 May 2018 announced that it would eliminate the goods and services tax (GST) starting 1 June 2018. The GST of 6 per cent first implemented on 1 April 2015, which has been blamed for causing higher living costs and squeeze purchasing power. While consumers are generally excited about the latest move, businesses in the petrochemical sector remain very cautious.

“While dismantling the GST, the government also plan to introduce a different sales tax. We are waiting for the next announcement concerning the new tax rate and how it would be implemented along the supply chain,” a trader commented. 

Other sources are finding it difficult to adjust the accounting system on such a short notice. “In the meantime, the abolishing of GST would theoretically lower prices of goods and services, which ultimately boost domestic consumption. We expect better market confidence in the second half of the year,” another market source said, adding that demand for PP and PE is a little weak at the moment due to the Ramadan season.