The Malaysia Shopping Malls Association (PPK Malaysia) is calling on the government to defer the expansion of the Sales and Service Tax (SST) on rental, leasing, construction, and beauty services until after Visit Malaysia Year 2026, warning that a slew of cost hikes is placing severe strain on the country’s retail and shopping mall sector.

PPK Malaysia noted that the retail industry is now under serious pressure, as escalating costs and ongoing global disruptions threaten operational stability and long-term viability. According to the association, tariff wars, supply chain breakdowns, and intensifying competition from regional markets and digital platforms continue to erode margins and dampen consumer sentiment.

The government’s planned imposition of an 8% SST on commercial rental and leasing services, along with a 6% SST on construction services, is scheduled to take effect on 1 July 2025. This will coincide with an increase in electricity tariffs. Further compounding the situation are a RM10 stamping fee on employment contracts beginning 1 January 2026, the introduction of fuel and subsidy rationalisation in the second half of 2025, and substantial increases in assessment rates, estimated at approximately 25%. 

In addition, licence fees under Jabatan Keselamatan dan Kesihatan Perkerjaan have increased by up to 600%, while the minimum wage will rise to RM1,700 effective 1 February 2025.

PPK Malaysia cautions that retailers will be left with little choice but to absorb these costs or pass them on to consumers. The resulting inflationary pressures may suppress consumer spending and weaken overall business performance. The association warns that such developments could undermine the viability and continuity of shopping malls across the country.

The external environment has further complicated matters. The ongoing United States-led tariff war has led to a redirection of goods to Malaysia, which has driven prices down and squeezed profit margins for local retailers. Unregulated foreign online platforms, especially those based in China, continue to sell under-priced goods in the Malaysian market, creating what the association describes as an uneven playing field for physical retail businesses.

In light of these pressures, PPK Malaysia is proposing a staggered SST implementation, beginning at 3% and rising gradually to 8% over five years. The association also calls for the exclusion of service charges from SST, noting that such charges are not rental income but recoveries for shared-area operational costs. To shield smaller businesses, PPK Malaysia recommends increasing the SST exemption threshold to RM2 million in annual sales.

“PPK Malaysia recognises the government’s fiscal objectives and emphasises the importance of implementing such measures in alignment with prevailing industry conditions. A phased and consultative engagement would be a constructive way forward to support business continuity while contributing to broader economic resilience.”

The association expressed its readiness to engage with the Ministry of Finance and other relevant agencies to share industry perspectives and work together on practical, balanced solutions to support the future of Malaysia’s retail landscape.

• TAGS:
• Malaysia Shopping Malls Association
• PPK Malaysia
• Retailers
• Sales and Service Tax
• Shopping
• Shopping Mall Sector
• SST