Kenangan Research: Absence of immediate plan to remove subsidised RON95 a good move
14 Oct 2023 04:25pm
Image for illustrative purposes only - FILE PIX
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However, the expected cash disbursements to civil servants may partially mitigate the forecast decline in consumer spending by stimulating purchases in areas like food and beverage (F&B) and daily necessities, it added.
"Given the impending sales and service tax rate increase, we anticipate consumers to pivot to high-value items such as cars and tech devices for the remainder of 2023, as opposed to stockpiling daily essentials. A stronger tourism industry will augur well for F&B players,” Kenanga Research said in a note today.
It added that consumer staples players, such as Dutch Lady Milk Industries Bhd and Fraser & Neave Holdings Bhd were expected to remain resilient while the departmental store/apparel players such as Aeon Co (M) Bhd and Padini Holdings Bhd were expected to face some challenges ahead due to lower spending power of their target customers, such as the M40 group.
On Friday, Prime Minister Datuk Seri Anwar Ibrahim announced that service tax goes up to 8.0 per cent from the current 6.0 per cent, and will expand to logistics, brokerages, underwriting and karaoke services.
While tabling Budget 2024 yesterday, Anwar said so as to not burden the rakyat, the increase would not cover services such as F&B and telecommunications.
Civil servants at grade 56 and below, including contractual appointments, will receive RM2,000 as an initial incentive payment, while all key public sector posts, including the police, firefighters, soldiers, armed forces, and uniformed members, will get RM1,000.
Meanwhile, Kenanga Research said the subsidy rationalisation that focuses on electricity and diesel, with no explicit mention of the RON95 petrol, is positive for the sale of passenger cars, given that most passenger cars are powered by petrol.
"We are positive about the wide incentives for the EV industry. EVs are slowly but surely gaining traction and interest is heightening as evidenced by the expanding range of vehicles being offered by automakers,” it added.
Kenanga Reseach said battery electric vehicles’ (BEVs) new launches were expected to be boosted by the sales tax, import and excise duties exemption and other EV facilities incentives.
"However, there is no extension for now for the sales tax, import and excise duties exemption. The government is committed to localising BEV production which we expect will attract more investments in the future,” it added.
Kenanga Research said various exemptions for e-hailing and taxi licences’ subsidies programme could spur stronger growth in the affordable national segment. - BERNAMA
