The Association of Commodity Importers for Pet Food Malaysia (ACiAFM) has urged the government to reconsider the Sales and Services Tax (SST) on imported feed ingredients as the move is expected to increase the cost of producing chicken, eggs and meat.
ACiAFM said that 30% of raw materials such as soybeans, pollard wheat, canola meal and vitamin premixes are subject to a 5% SST.
ACiAFM president Chong Kam Weng said importers and farmers are likely to pass on the additional cost to consumers.
He also urged the Finance Ministry to take the matter seriously by providing a sales tax exemption on raw materials.
The tax also covers various other items such as salmon, cod, truffles, silk, essential oils, industrial machinery, king crab and imported fruits except apples and oranges.
The association met with Deputy Finance Minister Lim Hui Ying in August to raise concerns about the impact of the new SST which comes into effect on July 1.
The government has exempted SST for several major imports, including fully imported corn, soybean meal (68% imported, 32% local) and palm oil and palm kernel cake which account for 70% of total food raw materials.
In addition, the total additional cost of SST is expected to be passed on to consumers, making poultry and livestock products more expensive and reducing the competitiveness of Malaysian producers compared to regional competitors.
To reduce these costs, the association proposes that food manufacturers and farmers be allowed to register for SST even though their products are not taxed.
