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SST uncertainty hits imported fruit trade

The upcoming amendment to Malaysia's Sales and Service Tax (SST), set to take effect on July 1, 2025, is expected to reshape the country's fruit sector, especially for pineapples, while raising concerns among importers and consumers of foreign fruit.

According to Sheikh Umar Bagharib Ali, Chairman of the Malaysian Pineapple Industry Board (LPNM), the revised SST framework presents growth potential for local agriculture, particularly for premium pineapple varieties like MD2. "This initiative can increase demand for local pineapples, allowing farmers and entrepreneurs to expand cultivation and boost production," he said. The anticipated rise in demand could elevate farm and market prices, improving returns for small-scale growers, young agropreneurs, and cooperatives across Johor, Pahang, Sarawak, and Sabah.

Downstream industries are also expected to benefit, including juice processing, snack manufacturing, and pineapple-based cosmetics—sectors that may see increased job creation and export value. Enhanced competitiveness of local fruits comes as the new SST is projected to make imported alternatives less attractive, helping reduce reliance on imports and aligning with national food security goals.

The government clarified that essential goods like rice and bread remain exempt under the new SST structure, while non-essential imports such as certain fruits and racing bicycles may be taxed at 5% or 10%, depending on classification.

However, not all stakeholders are optimistic. Traders in Alor Star's Pekan Buah market expressed concern about the ambiguity surrounding the SST application on imported fruits. A vendor noted that if items like oranges and grapes are taxed, the added cost will likely be passed to consumers, many of whom are from low- to middle-income households. Another trader warned that a blanket SST could curb demand significantly.

The Consumer Association of Kedah (CAKE) has called for clearer guidance from authorities. While the association supports taxing luxury imports such as salmon and king crab, it argues that essential, nutrition-rich fruits should be spared. Yusrizal Yusoff of Cake noted that 70–80% of Malaysia's popular imported fruits come from nearby countries and China. With examples like coconut imports for milk production due to local shortages, he emphasized the need for precise communication on SST applicability to avoid confusion and economic strain.

As local fruit sectors prepare to scale up and innovate with support from the SST policy shift, clear implementation guidelines and balanced tax enforcement will be key to ensuring equitable outcomes across the supply chain.

Source: Business Times
Source: Bernama