Exploring the Challenges of Goods and Services Tax on Batik Manufacturers

  • Authors

    • Zalilawati Yaacob
    • Nadiah Abd Hamid
    • nor Fara Shahirah Kamal
    • Noorlaila Ghazali
    • Roszil Shamsuddin
    2018-10-07
    https://doi.org/10.14419/ijet.v7i4.15.25766
  • GST, Business Performance, Compliance, Batik Industry, Batik Manufacturers, SME, Malaysia

  • Abstract

    The implementation of Goods and Services Tax (GST) in Malaysia has received criticism from various parties such as businesses, policy makers, professionals, business associations and individuals. Despite the rejections from these parties, the government proceeded to implement GST on 1 April 2015. Subsequently, this led to difficulties encountered by businesses, particularly the manufacturing industry in adjusting the production cost, setting prices of products, and comply with the new indirect tax structure. Hence, this study aims to explore the challenges of GST on SME batik manufacturers pertaining to business performance and compliance. A semi structured interviews were conducted on the top management and owners of SME batik manufacturer in two states of Malaysian Peninsular, namely Kelantan and Terengganu. The respondents reported that, during the era of GST, sales of their batik products decreased tremendously. In addition, they described the GST system as a complex system that affects compliance. This study solicits government’s attention on the impact of GST on Malaysian batik manufacturers. The findings suggest that it is essential for government to devise plans in reducing the financial burden of batik manufacturers and to simplify the GST mechanism in encouraging a high level of GST compliance.

     

  • References

    1. [1] Akhir, N. H. M., Ismail, N. W., & Said, R. (2015). Traditional Craftsmanship: The Origin, Culture, and Challenges of Batik Industry in Malaysia Islamic perspectives relating to business, arts, culture and communication

      [2] (pp. 229-237): Springer.

      [3] Asmuni, S., Yusoff, S., & Ses, N. S. M. (2017). Acceptance towards Goods and Services Tax (GST) among local business communities.

      [4] Journal of Emerging Economies & Islamic Research, 5.

      [5] Bidin, Z., & Marimuthu, M. (2016). Attitude determinants in proposed goods and services tax among manufacturing companies in Malaysia. International Review of Management and Marketing, 6(8S).

      [6] Chen, L. E., & Taib, M. S. B. M. (2017). Goods and Services Tax (GST): Challenges Faced by Business Operators in Malaysia. Paper presented at the SHS Web of Conferences.

      [7] Eniola, A. A., & Entebang, H. (2015). Government policy and performance of small and medium business management.

      [8] International Journal of Academic Research in Business and Social Sciences, 5(2), 237.

      [9] Hairuddin, H., Noor, N. L. M., & Ab Malik, A.

      [10] M. (2012). Why do microenterprise refuse to use information technology: A case of batik microenterprises in Malaysia. Procedia-Social and Behavioral Sciences, 57, 494-502.

      [11] IKN. (2009). Seni Kraf Batik: Motif & Teknik. Ismail, W. N., Mokhtar, M. Z., & Ali, A. (2013). Design activities and the difference level of sales and profits performance of the batik

      [12] SMEs in Malaysia. International Review of Management and Business Research, 2(2), 627-642.

      [13] Keen, M., & Lockwood, B. (2010). The value added tax: Its causes and consequences.

      [14] Journal of Development Economics, 92(2), 138-151.

      [15] Khoo, S. (2015, 30 Mar 2015). Challenges of GST: Cost management and competitiveness,

      [16] The Star Online. Retrieved from

      [17] https://www.thestar.com.my/tech/technews/2015/03/30/challenges-of-gst-cost-management-and-competitiveness/

      [18] Ling, S., Osman, A., Arman Hadi, A.,Muhammad Safizal, A., & Rana, S. (2016). Public acceptance and compliance on Goods and Services Tax (GST) implementation: A case study of Malaysia. Asian J. of Soc. Sc. & Hum, 5(1), 1-12.

      [19] Ling, S. C., Osman, A., Muhammad, S., Yeng, S. K., & Jin, L. Y. (2016). Goods and Services Tax (GST) compliance among Malaysian

      [20] consumers: The influence of price, government subsidies and income inequality. Procedia Economics and Finance, 35, 198-205. Mat Nor, F., Azman, A. S., & Rafdi, N. (2015). Kesan Perlaksanaan GST: Keperluan Penetapan Semula Had Kifayah. Paper presented at the International Conference on Management and Muamalah.

      [21] Menon, S. (2017). KPMG Compliance Pilot. Musa, H., & Chinniah, M. (2016). Malaysian SMEs Development: Future and Challenges on Going Green. Procedia-Social and Behavioral Sciences, 224, 254-262.

      [22] Nair, N. (2014). A boost for batik, The Star Online. Retrieved from

      [23] https://www.thestar.com.my/news/community/2014/09/26/a-boost-for-batik- designers-work-lifts-profile-of-traditional-fabric/

      [24] Nordin, R., & Bakar, S. S. A. (2012). Malaysian Batik Industry: Protecting Local Batik Design by Copyright and Industrial Design Laws.

      [25] International Journal of Business and Society, 13(2), 117. Palil, M. R., & Ibrahim, M. (2011). The impacts of goods and services tax (GST) on middle income earners inMalaysia. World Review of Business Research, 1(3), 192-206.

      [26] Palil, M. R., Ramli, R., Mustapha, A. F., & Hassan, N. S. A. (2013). Elements of compliance costs: Lesson from Malaysian companies towards Goods and Services Tax (GST). Asian Social Science, 9(11), 135.

      [27] Ramli, R., Palil, M. R., Hassan, N. S. A., & Mustapha, A. F. (2015). Compliance costs of Goods and Services Tax

      [28] (GST) among small and medium enterprises. Jurnal Pengurusan (UKM Journal of Management), 45.

      [29] Redzuan, M. r., & Aref, F. (2009). Path-analysis model of the development of handicraft (batik) industries in kelantan, Malaysia. Journal of American Science, 5(8)

      [30] 31-38.

      [31] Sandford, C. (1981). Costs and benefits of VAT: William Heinemann Limited.

      [32] Sefiani, Y. (2013). Factors for success in SMEs: perspective from Tangier. University of Gloucestershire.

      [33] SMEAnnual Report. (2016/2017). from

      [34] http://www.smecorp.gov.my/images/SMEAR/latest/Chapter2.pdf

      [35] SMECorp. (2015). from

      [36] http://www.smecorp.gov.my/index.php/en/policies/2015-12-21- 09-09-49/sme-definition?id=371

  • Downloads

  • How to Cite

    Yaacob, Z., Abd Hamid, N., Fara Shahirah Kamal, nor, Ghazali, N., & Shamsuddin, R. (2018). Exploring the Challenges of Goods and Services Tax on Batik Manufacturers. International Journal of Engineering & Technology, 7(4.15), 510-513. https://doi.org/10.14419/ijet.v7i4.15.25766

    Received date: 2019-01-12

    Accepted date: 2019-01-12

    Published date: 2018-10-07