President of Federation of Malaysian Manufacturers (FMM) Datuk Soh Thian Lai speaks to reporters outside the Ilham Tower in Kuala Lumpur June 5, 2018. — Picture by Ahmad Zamzahuri

KUALA LUMPUR, Feb 28 — Firms said the Sales and Services Tax (SST) caused their operating costs to increase by as much as a tenth, according to a survey by the Federation of Malaysian Manufacturers (FMM) and the Malaysian Institute of Economic Research (Mier).

FMM president Datuk Soh Thian Lai said over eight in 10 businesses came to the same conclusion, The Star reported today.

“The main factor for the higher cost, according to 36 per cent of the respondents, was that the SST rate on raw materials, components and services is higher than the GST.

“In terms of implementation, the key technical issue faced by most respondents, or 39 per cent, is the lack of clarity on the application of procedures for exemption,” Soh was quoted as saying.

Businesses were also turning cautious for the rest of 2019, the survey found, with most expecting a decline in the first half of the year.

The government introduced the SST after it zero-rated and repealed the Goods and Services Tax (GST) last year.