SEBERANG PRAI: Malaysian gold jewellers may have to contend with a 20% to 30% drop in sales when the country’s proposed goods and services tax (GST) takes off on April 1 next year.
Penang Chinese Heng Woh Goldsmith Employees Union vice-chairman Foong Hon Beng said the GST would have an impact on jewellery buyers’ sentiments.
“Jewellery buyers would definitely feel the substantial 6% pinch in the purchase price but we are certain that after two years of familiarisation with GST, sales will increase. It is a short-term impact,” Foong said at a press conference here on the impact of the GST on gold jewellers. Penang is home to 80% of the country’s gold jewellers.
In Penang, Foong said there were eight gold merchant associations that represented more than 1,000 members. These members comprised gold bullion buyers, manufacturers, wholesalers and retailers.
Globally, Foong said Malaysian gold jewellery exporters would continue to maintain their competitiveness when the GST is implemented. He said the three schemes introduced by the federal government would exempt gold jewellers from the GST.
Foong said the programmes comprised the approved jeweller scheme (AJS), approved trader scheme (ATS) and approved toll manufacturer scheme.
“For instance, the AJS enables the approved jeweller to get relief on GST payments on the prescribed supply of gold, which contains at least 99.5% in purity, silver, which contains at least 99.9% in purity, and platinum, which contains 99.9% in purity.
“The approved jeweller is not required to pay the tax charged by the registered supplier.
“The ATS indicates that all goods imported by jewellers are subjected to GST but an approved jewellery manufacturer is allowed to suspend it for the import of goods,” Foong said.
He urged goldsmiths with an annual turnover of more than RM500,000 to register their businesses with the Royal Malaysian Customs Department.
He said it was a relief that the schemes would help gold jewellery exporters sell their goods at competitive rates. Foong said most of the gold products were exported to the Middle East.
This article first appeared in The Edge Financial Daily, on September 19, 2014.