13/11/2026

BIZ & FINANCE FRIDAY | NOV 13, 2026

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GST reintroduction may burden consumers: Johan o Treasury secretary-general says it could shift from corporate sector to the people, at a time when Malaysians are grappling with rising cost of living

Ű BY NIK ZARIF AZHAN sunbiz@thesundaily.com

PETALING JAYA: Reintroducing the Goods and Services Tax (GST) could shift the tax burden from businesses and exporters to consumers, making it unsuitable at a time when Malaysians are still grappling with the rising cost of living. Finance Ministry secretary-general of the Treasury Tan Sri Johan Mahmood Merican said the government’s existing Sales and Service Tax (SST) collection had reached 3.2% of gross domestic product (GDP), equivalent to the contribution generated by GST in 2017. He said this challenged the argument that bringing back GST would necessarily increase government revenue, as achieving a higher collection could require a higher tax rate, potentially adding to the financial burden on consumers. “If there is a transition to GST at the same rate, it will not necessarily help to increase revenue. “What will happen is the burden of tax will be transferred from the corporate sector, including the export sector, to the people,” Johan told reporters after a panel discussion at Deloitte’s 52nd TaxMax Conference here yesterday. He explained that the government needed to consider household income levels before introducing a broader consumption tax, particularly as the cost of living remained a major concern. “The government still feels that it is unreasonable to burden the people before their income levels have reached a reasonable level.” Johan’s remarks echoed Prime Minister Datuk Seri Anwar Ibrahim’s position in the Dewan Rakyat yesterday, where he said the government had no immediate plans to reintroduce GST, citing concerns over its impact on lower-income households. Anwar, who is also Finance Minister, said GST was a broad-based consumption tax affecting the wider population, while the government preferred to retain SST and make adjustments to address issues such as double taxation. Johan said that the government was prioritising efforts to strengthen household incomes through measures such as minimum wage increases and other income-support initiatives before considering any move that could increase the cost burden on consumers. On fiscal management, Johan highlighted the government’s commitment to consolidating its finances while maintaining economic growth amid global uncertainties. He noted that the fiscal deficit had narrowed KLANG: Malaysia needs to strengthen safety standards and certification for battery energy storage systems (BESS) to ensure that the technology can be used safely and sustainably, in line with national efforts to accelerate the transition to renewable energy. Deputy Prime Minister Datuk Seri Fadillah Yusof said safety must be a top priority in developing energy storage technology, given that system failures could lead to risks such as thermal runaway and fires. Fadillah, who is also the Energy Transition and Water Transformation Minister, said every BESS installation must adhere to high standards of safety, quality, and performance as well as meet technical requirements and international best practices. “It is not enough to simply possess technology. We must also ensure that the technology entering the country is safe. Therefore, what is being implemented here is a system that monitors safety aspects and establishes standards to ensure that installed batteries meet the prescribed requirements and criteria. “That is why the development of this certification is crucial – not only to protect consumers but also to prevent explosions and fires that could pose dangers to users and the general public,” he said at the launch of the BESS certification pilot project by BESSC Sdn Bhd in Kapar yesterday. Although the certification scheme is voluntary, he encourages companies intending to install

goods and services. “If you start low, psychologically they feel, hey, tax rate come down,” he said. Lee pointed out that GST’s input tax credit mechanism could help businesses offset taxes paid along the supply chain, reducing cascading effects and improving the competitiveness of Malaysian exporters. “Most importantly, whatever tax system that you are going to implement, make sure you can address the cascading effect.” However, Lee cautioned that any re introduction must address past implementation weaknesses, particularly delays in tax refunds that had affected small and medium enterprises’ cash flow. “Last time when we had GST, there were always delays in refunds. That impacted the cash flow of SMEs,” he recalled. Lee also urged the government to carefully assess any proposed hybrid tax framework combining elements of GST and SST, warning that a hastily implemented system could increase compliance complexity and place additional pressure on SMEs. “Don’t hastily implement it. That could complicate the whole tax compliance system, and the ones that will face the burden will still be SMEs,” he said. Lee maintained that the government appeared to be retaining its existing tax framework under Budget 2027, with revenue collection expected to be supported by stronger compliance and enforcement rather than the introduction of new taxes. Ultimately, he said any tax system should prioritise revenue efficiency, fairness, trans parency and simplicity while ensuring businesses remained competitive.

Johan (second from left) speaking during Deloitte’s 52nd TaxMax conference in Petaling Jaya yesterday. – BERNAMAPIC

existing system. He proposed that a GST rate of about 4% could potentially provide a revenue-neutral starting point if the government were to reconsider its implementation. “To me, the 4% could be the neutral level. That means your intention is to start reintroducing it, and slowly along the way, you can increase it,” he suggested. Lee explained that a lower initial rate could also offer a more favourable perception among consumers, particularly when compared with the existing SST rates of 6% and 8% on certain

from 5.5% of GDP in 2022 to 3.7% in 2023, with the government continuing its fiscal consolidation efforts, targeting a further reduction to 3.3% of GDP in 2027. However, he stressed that fiscal consolidation should not come at the expense of economic momentum, as continued support for growth remained important in sustaining the economy. Meanwhile, Socio-Economic Research Centre (SERC) executive director Lee Heng Guie said GST could offer a more efficient and transparent tax framework, particularly in addressing the cascading tax effect under the battery storage systems to seek guidance and use established standards to ensure safety and a return on investment for the industry, he said. Hence, he hopes all relevant ministries and agencies – including the Standards Department Malaysia and the Energy Commission – will collaborate to develop standards suitable for domestic use as well as serve as a potential benchmark at regional and international levels. Fadillah said Malaysia currently has an installed renewable energy capacity of nearly 14 gigawatts – about 32% of the country’s total renewable energy capacity – with solar energy as a primary growth driver. He added that the government has targeted renewable energy sources to comprise 35% of power generation capacity by 2030, rising to 70% by 2050. This aligns with efforts to strengthen energy security, reduce reliance on fossil fuels, and achieve net-zero carbon emissions as early as 2050. However, the rise in solar energy adoption also challenges electrical grid stability because this energy source is intermittent and dependent on weather conditions. This necessitates a system capable of balancing out fluctuations in electricity supply. He said BESS stores excess solar energy generated during the day for use at night, and it helps to stabilise the grid by regulating the amount of energy fed into the system. According to him, the growth of the BESS industry also creates opportunities for local

Fadillah: We have to strengthen safety standards for BESS

Fadillah delivering his speech at the launch of the BESS certification pilot project by BESSC Sdn Bhd in Kapar yesterday.– BERNAMAPIC

1,600 megawatt-hours (MWh). Additionally, the Sixth Large-Scale Solar Programme mandates the inclusion of battery components for relevant projects, with a power capacity of 1,250MW and an energy capacity of 5,000MWh. – Bernama

companies – in system installation and battery manufacturing. Among the government’s initiatives to expand the adoption of this technology is the MyBEST tender, which involves a battery power capacity of 400 megawatts (MW) and an energy capacity of