ACCCIM Survey Reports

ACCCIM 2014 SME Survey Report

Executive Summary
1. The implementation of Minimum Wages for foreign workers employed by SMEs has been deferred for one year, i.e. from 1st January 2013 to 1st January 2014 due to the strong objection from the businesses.  With full implementation of Minimum Wages, the impacts on SMEs and measures taken are still one of the main focuses of the survey.

2. The Goods and Services Tax (GST) schedule to take effect from 1st April 2015 will completely change the business operation and taxation submission format. Apart from replacing the Sales Tax and Services Tax that implemented since 1972 and 1975 respectively, this new tax regime is expected to bring huge impact to both businesses and consumers. Therefore this survey emphasizes on the understanding and preparation of SMEs on GST.

3. Effective from 2nd January 2015, Bank Negara Malaysia will implement 50 sen levy on cheques in order to encourage e-Payment. The survey also solicits the SMEs’ views on e-Payment.

4. The survey was conducted during the period of 28th June 2014 to 30th July 2014. A total of 2,000 questionnaires have been distributed, with 541 questionnaires received. Response rate is 27.05%.  The survey was conducted mainly through ACCCIM’s 17 constituent chambers and participated by selected trade organisations. Hence the respondents comprise of different industrial sectors from different regions of the country.

5. As high as 79% of the respondents with staff force less than 50 persons, and is categorised as micro and small enterprises. Hotels and Manufacturing are the two sectors that have more employees.

A. Minimum Wages (MW)

6. In order to comply with MW, 65% of the respondents indicated that they need to adjust their staff salary. Terengganu and Sabah are greatly impacted as 82% and 80% respectively of the respondents from these states need to adjust their staff salary upon implementation of MW.  Kuala Lumpur is not much affected as 59% of respondents have no effect. With regard to the various industrial sectors, Hotels (100%), Agriculture, Timber, Fishery, Farming & Gardening (93%) and Manufacturing (91%) are mostly impacted by the implementation of MW as businesses need to increase their staff salary due to implementation of MW.

7. 65% of the respondents responded that MW has increased their cost of operation. Kedah, Sabah and Terengganu are severely affected with 98%, 90% and 76% of the respective respondents from these states claimed that they have suffered from cost increased due to MW.

8. 39% of the respondents do not take any measure to mitigate the impact of MW.  Respondents who choose automation to mitigate the impact of MW are from Agriculture, Timber, Fishery, Farming & Gardening (53%) and Manufacturing (41%) sectors.

B. Goods & Services Tax (GST)

9. 69% of the respondents need to register for GST. Most respondent are from Hotels (100%), Manufacturing (87%) and Logistics (82%) who reached the threshold of GST. 8% of the respondents will register voluntary although their taxable turnover has not reached the threshold. Overall, 11% of the respondents are not sure whether they need to register for GST, in particularly respondents from the Travel & Entertainment sector, the percentage from this sector itself is as high as 20%.

10. Majority of the respondents (80%) do aware that they can register online through Royal Malaysian Customs’ GST website with effect from 1st June 2014. Industrial sectors that need to enhance awareness on GST are Food & Beverages, Travel & Entertainment, and Agriculture, Timber, Fishery, Farming & Gardening.

11. Generally, respondents’ understandings on the various basic terms of GST need to be strengthened.   Only 60% of the respondents understand what is input tax and output tax, while only half (50%) of the respondents know what are standard rated supply, zero rated supply and exempt supply. Most respondents from Property Development understand the above terms, while respondents from the Food & Beverages sector are rather ignorant.

12. 84% of the respondents indicated that they will personally attend or send their staff to attend GST trainings conducted by Royal Malaysian Customs / professionals as the first measure in preparation for the GST.  Only 4% opt for upgrading their accounting software as initial measure. This implied that most of the businesses will only decide their next cause of action after they have understood what GST is. Unexpectedly, there is 1% of the respondents stated that their first action is to store additional stocks before the implementation of GST.

13. 35% of the respondents found that the most stressful aspect they are facing to get ready for GST is lack of information for the public, followed by the too technical and complicated GST Bill (35%) and increase of compliance costs (18%).

14. More than half of the respondents (58%) hope that the government can grant longer grace period before imposing any penalty and take recovery actions against businesses, whereas another 1/5 of the respondents wish to have tax incentives on their GST compliance cost. In the numerous memoranda submitted by ACCCIM to the government on GST as well as the press statements issued by the ACCCIM, these two proposals are on the ACCCIM wish list and we are hoping that the government could render more assistance to businesses.

15. Survey revealed that only 30% of the respondents stated that their employees and accounting software are ready for the implementation of GST.

16. Overall, the survey found that most of the respondents from the Food & Beverages sector are rather ignorant on GST, regardless their understandings on the various basic terms of GST, first action to be taken, or employees and software preparation for implementation of GST, this is worrying.

C. e-Banking

17. Only 34% of the respondents use e-Banking, most of them are from ICT and Logistics sectors.  Another 40% indicated that they will shift to e-Banking soon.  The statistic shows that Food & Beverages sector do not use e-Banking at all, and 78% amongst them have no plan to use it. Kuala Lumpur, Selangor, Negeri Sembilan and Penang have the highest usage of e-Banking.

18. Respondents’ major concern of using e-Banking is the security issue on e-transaction (76%), followed by the coverage and stability of broadband services (44%). Respondents that expressed concern over the coverage and stability of broadband services mostly are from Melaka, Sabah, Sarawak and Terengganu. For Logistics (38%), Wholesale and Trading (32%), and Travel and Entertainment (30%) sectors, one of the major concerns is e-Payment which unable to replace the function of Post-dated Cheque.

19. Almost half of the respondents (43%) stated that they will not reduce the issuance of cheque even though a 50 sen levy per cheque is being imposed.

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