Malaysian retail associations have collectively demanded the government “rethink” and withdraw a proposal to impose a luxury goods tax. 

Eight organisations – including the Malaysia Retailers Association, the Malaysia Retail Chain Association and the Malaysia Shopping Malls Association – said in a joint statement the government’s imposition of the luxury tax would “make pricing in Malaysia non-competitive and may deter tourist arrivals”. 

“Malaysians will be enticed to buy overseas and Malaysians shopping abroad will take money out of the country,” they added.

“Even if a mechanism can be designed for foreign tourists to claim back such luxury taxes, Malaysians would still be enticed to do their shopping overseas.”

In the Budget 2023 speech last month, the country’s prime minister Datuk Seri Anwar Ibrahim proposed plans to introduce a luxury goods tax this year with a certain limit based on the type of luxury goods. The items include luxury brand watches and fashion goods.

The retail groups expressed concern about the potential for a thriving black market industry should the luxury tax be implemented. 

The statement said in 2018, about 37.6 per cent of tourists’ receipts which translate to foreign exchange earnings in Malaysia have been from shopping. The country has been positioning itself as a shopping haven with prices “on par with” Hong Kong, Indonesia, Thailand and Singapore. 

Further reading: Singapore-based luxury fashion retail group FJ Benjamin reported a net profit of US$1.7 million for the half year ended December 31, a reversal from a net loss of $1.3 million in the corresponding period last year. The group’s sales in Malaysia improved by 48 per cent. 




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