Highlights:
- Threshold for annual sales tax to be raised under SST
- Local businesses and MNCs optimistic of economic outlook
- Malaysia container throughput posts growth this year
- Credit card debts in Singapore on the rise
- Global fintech investment soars to record US$57billion
Threshold for annual sales tax to be raised to RM500,000 under SST
The Government will increase the annual sales threshold for eligibility to register for the Sales Tax to RM500,000 annually under the Sales and Tax Service Tax (SST) from RM100,000 previously. Finance Minister Lim Guan Eng said the annual turnover threshold of RM500,000 would also apply to manufacturers who carried out sub-manufacturing activities, for which the annual sales threshold was at RM20,000 before. “This is to enable small-sized manufacturers to operate without having to pay this tax,” he said when tabling the Sales Tax Bill 2018 for the second reading at the Dewan Rakyat today. Lim said the government expected only 27,456 manufacturers would be registered under the Sales Tax compared with 32,725 under the Goods and Services Tax (GST). He said subsequently, most manufacturers would fall out of the scope of the Sales Tax and this would eventually reduce the cost of tax compliance and administration for small-sized manufacturers.
Local businesses optimistic of economic outlook over the next 12 months
Businesses in Malaysia are optimistic of the economic outlook over the next 12 months, with multinational companies expressing slightly higher optimism, according to the findings of a survey carried out by Ipsos Business Consulting. The study also disclosed that sentiment was underpinned largely by the hope that the new government would come up with policies and initiatives which are expected to restructure and boost the economy. “The overall positive sentiment on the economy also translated to an equally upbeat sentiment on their own business prospects, partly due to the expected improvement in the local business climate,” said Kiranjit Singh, Country Head, Ipsos Business Consulting. The one-month survey, carried out from June 2018 and July 2018, was participated by over 100 businesses and was done as the country approached the three months’ mark since the change of government in Malaysia. Ipsos engaged with the respondents to understand their main worries, confidence in the economy and areas that they think the new government should focus on and provide an insight for policy makers to understand the views of businesses operating in Malaysia. Stabilising the local currency and ensuring consistent policies were some of the pertinent areas which Malaysian businesses felt the government should focus on in the next two years.
Malaysia container throughput posts growth this year
Malaysia’s container throughput is registering growth as compared to 2017. Deputy Transport Minister Datuk Kamarudin Jaafar said last year, Malaysia recorded a slight dip in the containers registered at Malaysian ports due to various factors, including the scenario of lower growth posted overall by the shipping industry, as well as business consolidation at the global level. “We understand and feel the effect of the shipping alliance reshuffling to Singapore, but have been informed that we are registering growth so far,” he told reporters on the sidelines of the World Maritime Week 2018 in Kuala Lumpur. A major revamp has been seen in the global shipping arena, with carrier competition shrinking all the way down to three alliances, namely THE Alliance, 2M and Ocean Alliance. The three represent 77.2 per cent of global container capacity and a whopping 96 per cent of all East-West trades. Malaysia’s transhipment activities have also declined to between 10 per cent to 15 per cent over the years and the trend is continuing.
Credit card debts in Singapore on the rise
Singaporeans are big credit card fans — and an improving economy means consumers are swiping plastic more frequently than ever. But beneath this exuberance lurks the risk of escalating debt. Credit card debt in Singapore has been inching up. Household debt levels in Singapore are largely under control, thanks in part to borrowing curbs imposed in recent years. Still, a small but growing group of borrowers continue to struggle with mounting credit card debt. Credit card debt made up about 4.3 per cent of all consumer loans in 2016 – roughly on par with 2015’s 4.2 per cent, according to data from the Department of Statistics. Banks wrote off a total of S$128.3 million in bad credit card debt from January to May this year, according to MAS data. On a per card basis, bad credit card debts written off reached S$3.34 per card in May 2018 — a level last seen in 2005. This means borrowers were persistently unable to repay these loans, forcing banks to write them off. This comes as the number of credit cards in circulation in Singapore has risen rapidly over the past decade according to MAS data – from about 6 million in May 2008 to a whopping 9 million as at May 2018, a 50 per cent surge. The MAS noted in its November 2017 Financial Stability Review that there are still “a number of borrowers who are increasing their level of indebtedness above 12 times their monthly income”. Consumers accumulate credit card debt for a variety of reasons, including spending above their means, bouts of unemployment and paying for essentials. The numbers show that people in Singapore are increasingly reliant on their credit cards. Monthly billings per card hovered between S$300 to S$400 from the mid-1990s to early-2010s, but have started rising above $S400 in recent years. In May 2018, monthly billings per card amounted to about S$555, after reaching S$514 in April and S$537 in March.
Global fintech investment soars to record US$57billion
GLOBAL fintech investment roared ahead at a record pace in the first half of 2018, with US$57.9 billion (RM236.18 billion) invested across 875 deals, a significant increase from the US$38.1 billion invested in all of 2017, according to the KPMG Pulse of Fintech report. Highlights of the first half included the successful closing of two massive deals: the record-setting US$14 billion raise by Ant Financial in 2Q18 and Vantiv’s acquisition of WorldPay for US$12.9 billion in 1Q18. Overall deal volume was robust, rising from 834 in 2H17 to 875 deals in 1H18. Further, global median size of late-stage venture financings rocketed to US$25 million during 1H18, up from the US$14 million annual median size seen in 2017. Venture capitalists remain excited about funding fintech startups across a wide range of fintech subsectors, but M&A activity is also growing as more mature fintechs seek exits. “In Asean, we are starting to see phase two of the fintech revolution with bigger Chinese fintechs setting their sights on countries in the region as the next step in their growth agenda,” said Chia Tek Yew, head of Financial Services Advisory, KPMG in Singapore. “With a large population, relatively similar macroeconomics to China, large underbanked populations and a significant number of Chinese people overseas, the region is seen as a strong stepping stone to further global expansion. For Singapore, not only is more investment flowing into regtech and insurtech, the country is paving the way for Asean in the development of a regional fintech innovation sandbox, and seeing stronger regulator support that allows for greater financial inclusion.”
