Malaysia SME Association presses Putrajaya for urgent SST review in wake of US tariffs

Malaysia SME Association presses Putrajaya for urgent SST review in wake of US tariffs



A general view of shipping containers at Westports Pulau Indah in Klang, September 27, 2024. — Picture by Firdaus Latif

Friday, 01 Aug 2025 10:48 AM MYT


KUALA LUMPUR, Aug 1 — The SME Association of Malaysia has urged the government to urgently review the Sales and Services Tax (SST) framework in response to a new 19 per cent tariff on Malaysian exports to the United States.

The association said the tariff, which affects key industries like electronics, rubber products and medical devices, is severely weakening the competitiveness of export-oriented SMEs.

Its national president, Chin Chee Seong, said the added burden of SST at home has worsened the cost pressures caused by the external trade barrier.

“The 19 per cent US tariff is already putting immense pressure on our export-oriented SMEs, especially in sectors like electronics, rubber products, and medical devices.


“At the same time, the expanded SST has raised operational costs for businesses involved in manufacturing, leasing, logistics, and services — without any form of input tax credit to offset cascading tax effects,” Chin said in a statement.


He warned that without urgent reforms, many SMEs may not survive the dual hit of international tariffs and domestic tax policies.

The group is calling for immediate SST restructuring, including business-to-business exemptions for licensed manufacturers and essential service providers.


It also wants the government to consider bringing back a reformed Goods and Services Tax (GST) that includes input tax credits and lower compliance costs.

Chin said the SST’s cascading tax effect and lack of transparency discourage formal business growth and damage supply chain efficiency.

To help offset export losses, the association urged the government to increase funding for market expansion, particularly in the Halal sector and difficult markets like China and the Middle East.

It said SMEs need hands-on support in areas such as branding, regulatory compliance and localisation strategies tailored to overseas markets.

The association also called for faster disbursement of soft loans, digitalisation grants and other financial aid to SMEs hit hardest by the tariff.

Chin stressed that a coordinated tax and export support strategy is vital to keep Malaysian SMEs competitive amid rising global and domestic pressures.

This morning, US President Donald Trump announced the new tariff rate for Malaysia, down from the 25 per cent he initially planned to impose on the country over a trade deficit he believes to be evidence of unfair trade practices.