IMPACT OF THE GST TO ZERO IN AUTOMOBILE INDUSTRIES

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On the 9th May 2018, the unexpected scenario had happened in our country. In our country general election, a shockwave had been seen to the world due to the results as the National Alliance party which had ruled the country for 60 years had been overthrown by the Pakatan Harapan led by Tun Dr. Mahathir bin Muhammad. This is a historic general election result that is not predicted even by the foreign journalist like Al – Jazeera, CNN, BBC, and other as they expected the ruling government led by Datuk Seri Najib Razak to be victorious again. The loss of the National Alliance had been contributed to scandal and rampant corruption allegation like the murder of Altantuya Shaariibu, Kevin Morais, and the most famous of all the 1MDB issue. The ruling government had led to the anger and frustration of the people who had shown their people power via voting to overthrow the ruling government. It is a bit like the people power that had led to the downfall of Ferdinand Marcos in Philippine, however, their one difference the people power in the Philippines was led in the street and the people power in our country is via the election.

Which these results, Tun Dr. Mahathir had become the 7th Prime Minister of our country which also become his second term of ministership and he also had created a record of becoming the world oldest prime minister as he is 92 years old. Before the election, Pakatan Harapan parties had promised many things on their election manifesto and one of them is the abolishment of the GST and starting from 1st Jun 2018, it had happened when Tun Dr. Mahathir had announced that the GST will become 0% from 6% and it had given a great impact in the automobile industries.

Tun Dr Mahathir bin Mohammad had become the oldest prime minister in the world

The first impact due to these, the car price had been reduced were some car brand like Mercedez Benz had shown a reduction of nearly RM18,000. Before this, the car price is subject to the GST and it makes the car price expensive in our high foreign tax for the car. Which this reduction this will attract more user or any first-time buyer to buy a car as the car price had gone down even though it not cheaper, but they are some moderate reduction in the price.

The car manufacture like Proton also had decided to refund the GST to the user. To facilitate with the reduction in the GST, the car manufacturer on a good term decided to refund the user the GST that had been paid when they had bought the car during the GST time. This will encourage the car lovers to have a great degree of respect for the car manufacturer as they will deem this act of goodwill and for the car manufacturer, this will be a great business strategy as it will create loyalty among the car lovers hence increase the sales of their car.

Due to the reduction of GST to 0% percent and the expected introduction of the SST in 3 months’ time, it is expected that they will be new buyer of the car as most of the car lovers will loved to buy their favourites car brand during this time as the car price is slightly cheaper due to this change. This will increase the sales and revenue for the expected car brand showroom and for the service center.

The next thing which is far greater than this, it will create a trust in the new government as they had fulfilled one of their election manifestoes. The reduction of the GST is one of manifesto that is expected to be just a promise before the election as usual only but in these, it had been delivered. Another thing that will make the people happier is the introduction of SST will be announced in the 3 months and not instantly hence it will give the new government a way to facilitate the reduction of GST and making the introduction of the SST easier without high increase in the price of the things that including in the automobiles industries too.

Although they are some critics especially the political analysis and the economic expert whom had said that the GST will only temporarily reduced the car price and with the later introduction of the SST the car price will be increased back, which can be true also but the Council of Elder under the new government had already guaranteed that the GST abolishment will not affect the government revenue. The difference between the GST and SST where GST is taxed in all parts where the SST in only at the manufacturing level hence the price increase will not be expected as per the GST.

The council of elder . Member From left: Tun Daim, Tan Sri Robert Kuok, Tan Sri Zeti Aziz, Professor Jomo, and Tan Sri Hassan Marican.

The GST is one of the factors that had led to the downfall of the previous ruling government that had ruled this country for 60 years since our independence in 1957. The GST had led to many irate consumer and people where the GST introduction had seen a great increase in the price especially the car price where the higher prices led to more tax charged to the user.

Now the abolishment of the GST had seen the price of the consumer thing had been dropped significantly and the dreaded receipt and invoices that show the GST is no longer there. But however, with the introduction of the SST later it will lead to increasing of the price again but how high it will be is unknown or will the new government control the price mechanism to avoid some seller increasing the price unnecessarily by using the introduction of the tax as any tax that had been introduced and the cost of the tax will be burdened by the end user and this will be something that will be accepted by the people if the price had been increased dramatically due to the SST implementation.

 

 

 

 

 

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