Foreign firms keen to do business due to cost advantage

PETALING JAYA: Overseas companies are eyeing Malaysia as a hub to reduce cost following the implementation of the 10% Low Value Goods Tax (LVGT) for import goods costing RM500 and below sold online, says a group.

After considering several factors, including the cost of doing business, Malaysia Cross Border E-Commerce Association president Eng Kin Hoong said some overseas companies are now thinking of opening their business here.

“We have received several inquiries from suppliers based in China and Taiwan about starting businesses here.

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“Their main concern is whether the LVGT has impacted the consumers. However, so far, there has been no major impact on consumers.

“Rather, it’s the suppliers from other countries who might have been affected instead,” he said.

As the companies were facing more significant effects due to the tax, starting a business in Malaysia would be more financially viable, said Eng.

Some of the sectors involved are cosmetics, health supplements and sanitary products.

“While LVGT could help in creating a level playing field for our sellers, we also gain by having the businesses operate in Malaysia,” he added.

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Some online shopping platforms, said Eng, also offered discounts to ensure the new tax does not further burden consumers.

He said it was the smaller businesses such as “dropshippers” who sourced their products from overseas that might feel the pinch.

“They might be affected but generally, there was no major complaints from our members. To date, I could say the situation now is still quite positive,” he added.

Malaysia began charging the LVGT beginning Jan 1 this year.

Senior executive Tan Lee, 24, who buys clothes and accessories online, said she did not notice the tax.

“Maybe there was a slight increase in price but I didn’t really feel the pinch. Even with the tax, the prices of goods online are still significantly cheaper than buying in store,” said Tan, who buys most of her stuff online from China.

Marketing associate Ahmad Zulfiqar, 28, said since the implementation of the tax, he always opted for local sellers on ecommerce platforms.

“I usually buy gadgets from overseas because they are cheaper than those in Malaysia.

“However, I noticed that some gadgets have become slightly expensive so I might as well buy directly from local suppliers because the shipping will be faster,” he said.