On Monday (June 9), the government announced the revision on SST to boost revenue and strengthen the country’s finances.

To ensure that the majority of citizens remain unaffected, the administration has promised that essential goods and services will not be taxed.

But the SST document, which is over 222-pages and contains thousands of items, paints quite a different picture.

ALL Imported Fruits Will Be Taxed

Many people were shocked when they realized that imported fruits (even those that are produced locally) will be hit with the Sales Tax.

For a better idea, Malaysia imports A LOT of fruits, including apples, oranges, starfruit, ciku, lemons, rambutans, jackfruit, longans, and papayas. These will all be taxed, as long as they are imported.

This doesn’t even touch the more absurd things which the administration claims as non-essentials, such as:

• Salt

• Yogurt and buttermilk

• Preserved meat (ham, beef balls, luncheon meat)

🎙️ What I Discussed With Hann Liew

On Sunday, I invited Hann Liew, founder of RinggitPlus and Halogen Capital, to break down the SST changes and how we can cope with price increases.

Listen to the full replay on:

Spotify: https://open.spotify.com/episode/0rHPNDYnFavIppjZrfgkDi?si=gjheFwlRRPCp2z1E3gdL9g

Apple Podcast: https://podcasts.apple.com/my/podcast/the-futurizts-podcast/id1696260841?i=1000713183409

YouTube: https://youtu.be/8Z6qpeuQgCA

Scroll down for a summary of the discussion.

Q1: What do you think about the SST Increase? Do you share the same frustration as the rakyat?

I think we shouldn’t be too shocked by the length of the list. This is part of a harmonized quote which most countries use globally. It is quite long by default.

Actually, many of these items were already taxed before. But because SST isn’t multi-staged like GST, we don’t see it clearly. We’ve had a similar experience in the previous years, dating all the way back to 2010, except for Najib’s GST era.

What I find a bit shocking is the breadth of the non-exempted goods. Last year, when the government proposed budget 2025, their promise was to only tax premium imported items (ie. Salmon, Avocado, Blueberries).

But as we know now, the list of items that will be taxed is quite extensive, and it is also very questionable for them to tax ALL imported fruits, when Malaysia is known to consume very little fruits and vegetables.

Switching to local fruits sounds easy, but almost 100% of apples and oranges are imported. Many people can’t easily remove these from their diet.

This just shows the lack of communication between the Ministry of Health and the Ministry of Finance.

I think this is what the Rakyat is mainly frustrated about. And if you’re running a business, you may be even more on edge because the SST order was gazetted on Monday (Jun 9) and will be implemented on July 1.

There is not enough time given for businesses to adapt and change their systems, which will likely force them to absorb a lot of the initial cost.

Q2: Price hikes are inevitable. But how soon will we see them? Are businesses already pricing in the increase?

I don’t think price hikes will happen in these couple of weeks, but expect changes after July 1.

If you’re a business importing fruits, you’ll see a tax imposed by the custom which you have to pay.

Then these businesses will either have to absorb the cost or pass it down to customers—which they’re likely to do both, because imposing a sudden 5-10% hike may be a big shock to consumers.

That’s only on the imported side.

If you’re a local business owner, you may raise prices as well, because there was already a demand for your goods before the tax increase, and now with the hike, there is more demand for your business.

So even businesses who are not subjected to sales tax MAY raise prices as well, which will impact inflation.

Q3: The tax on luxury goods has been postponed until further notice. Why is the government not prioritizing this and taxing low value goods instead?

There are two difficulties to high value goods tax:

• You can’t go above what you’re already charging (10%). You have to pass a new law and draft a new order.

• Bigger problem: capital (ie. money and wealth) is much more mobile than people. This is not a unique problem to Malaysia.

Rich people can move their money elsewhere very easily. Take a look at tourists for example. If you impose a hefty tax on luxury goods, you’ll start impacting tourism revenue very heavily, without getting much returns.

To put it bluntly, it’s a lot of friction for us to leave our home country, so it’s “easier” for the government to impose a tax on us.

It’s much harder to tax the wealthy people, because their capital is very mobile. They can just move it elsewhere.

Q4: How can we cope with the price increases? How should we adjust our budgets?

A few things you can consider:

• Substitution: It’s time to stop buying too much imported stuff and start supporting local vendors. We can’t be picky when prices are going up. Switch from apples and oranges to guavas and bananas.

• Build up your inventory: Like what the Americans did before Trump imposed tariffs, you can stash up your home with imported items that are expected to go up. Obviously, the exceptions are fruits and vegetables because their shelf life is short. But for other things (ie. salmon, certain meat and seafood) which can be frozen or have a long shelf life, you can start to stock up.

• Calculate your potential increase: Don’t get caught off guard on price increase. Add in a little buffer for your monthly budgets (about 3-5%) so you can adjust to price hikes. Save a little more.

Remember, you can’t control what the government does, but you can certainly control your own money.

Q5: What’s one piece of advice you would give every Malaysian right now to protect themselves financially?

The most important thing is that you’ve got to be a consumer who’s aware of prices around you.

Have a sense of what you’re paying now and what you’re paying in the future.

Only by doing so, will you be able to plan the right path on how to adjust your budgets.

Sure, it’s alright every now and then to get frustrated with the government and fight against them for change, but at the same time, make sure you’re prepared for any price increases so you won’t get caught off guard.

This summary does not fully encapsulate the thoughts shared by Hann Liew.

I highly recommend you to listen to the full replay.

About the speaker: Hann Liew is a personal finance expert with over a decade of experience in the financial industry. Previously the CEO of RinggitPlus, he is qualified as a licensed financial planner (CFP) and a chartered financial analyst (CFA), and has helped tens of thousands of Malaysians on their path toward financial literacy. Hann is currently the founder of Halogen Capital, the world's first Shariah-compliant crypto fund that provides institutional exposure to Bitcoin.