Photo - Cheah Kok Hoong, Chairman, National ICT Association of Malaysia [PIKOM]
According to the National ICT Association of Malaysia, PIKOM, 75 percent of Malaysian businesses prefer the new Goods and Services Tax [GST] to the existing Sales and Services Tax [SST] model, however less than 25 percent of organisations have sent their ICT staff for GST training.
Announced by the Malaysian prime minister Seri Najib Tun Razak in Budget 2014, the GST will replace the existing indirect tax on 1 April 2015, said PIKOM chairman Cheah Kok Hoong, who added that more than 60 percent of local organisations said that GST will significantly impact their revenues.
PIKOM's GST study -' GST Impact on Businesses' Survey' - conducted in March of this year showed that although more than 60 percent of organisations have a GST project plan in place, Cheah said more financial and training support is required to help implement the new GST system more smoothly.
"PIKOM's GST Survey gathered that today's local organisations already have some basic knowledge about the impending GST system such include the zero-rated supply, exported goods exemption, non-compliance regulation, penalties and more," he said.
"This is likely mainly attributed to the effective advocacy and awareness programs that have been driven by the government together with select members of the private sector," said Cheah. "However, PIKOM's GST Survey also reported that less than 50 percent (or half) of these local organisations admit that they are ready to adopt the new GST system from the perspectives of workforce, IT system and business processes."
Companies slow to train
"Most shockingly is that as of now, less than 25 percent (or a quarter) employers have sent their ICT employees to be properly trained to implement and leverage the new GST system," said Cheah.
Local businesses, especially small and medium enterprises (SMEs), have started feeling the pressure to expedite the GST system implementation process in order to meet the deadline, he said.
Cheah said, "At this stage, many organisations have found out themselves that they have only allocated a limited budget, and possessed inadequate resources and knowledge, to properly get themselves ready in facing the far-reaching operational and financial impact of a new tax system in their business."
Some of the other survey findings are:
- There is a clear market demand for more financial and training supports to implement GST system
- The market's other significant requirements include guidance and support, on the aspects of business process automation and technology, to embrace the GST system quickly and efficiently
- More than 60 percent of local organisations have a GST project plan
- More than 70 percent of local of organisations indicated that their employees need (more) training to perform GST system implementation and manage the impact to the business operations
"The highlight point from this survey is that Malaysian organisations are looking for more alternatives for financial and training supports from local companies and government agencies to achieve a better success rate for their in-organisation GST system implementation projects," added Cheah.
"In addition, they are also actively turning to ICT vendors to seek consultation to optimise the existing organisational infrastructures to comply with the new GST system," he said.
"On a positive note, PIKOM is clearly seeing that local ICT organisations are playing an important role to 'cushion' the impact of local businesses trying to deal with the complexity of GST-readying their systems, by leveraging their expertise and track record of GST implementation in other countries," said Cheah, adding that PIKOM has planned a series of seminars and workshops to support businesses and consumers.
"In line with PIKOM's effort to advocate the GST system implementation, we are planning to offer businesses and consumer ICT consultations and solutions during the Digital Lifestyles Expo, which will be at KL Convention Centre and is scheduled from 8th to 10th August, 2014," he said.
"Overall, despite the adoption challenges, organisations are still proactively putting efforts to keep the GST project moving as they are well aware of its importance and impacts to business on a long term basis," said Cheah.
The PIKOM's survey was conducted with more than 1,000 local organisations nationwide, primarily in the IT sector.