KUCHING: The Sarawak Timber Association (STA) hopes that the Sarawak government will consider granting a 12-month grace period to implement the new state sales tax (SST).
STA chairman Datuk Henry Lau Lee Kong said the sudden imposition of the SST ranging from 1 per cent to 2.5 per cent on the export of selected timber products such as sawn timber, veneer, woodchips, fibreboard, particleboard and plywood effective April 1 has caught the timber industry off-guard, leaving too little time for the industry to prepare for it.
“Our members only received notification to register for SST on March 21, 2023, even though the decision to impose SST was made in October 2021.
“This new tax on selected timber products could have far-reaching consequences for the downstream timber industry including increased production costs, decreased competitiveness and market share, reduced investment, downsizing of the downstream timber industry, and eventually loss of revenue for the Sarawak government.
“The survival of the downstream timber industry is at stake here, what more to say achieving the Sarawak government’s export target of RM6 billion in value-added timber products by 2030,” he said during the association’s 2023 annual general meeting at Wisma STA today.
Therefore, STA hopes that the Sarawak government would grant members a grace period of 12 months to implement the SST and not charge the current prescribed tax rate, but instead allow a phase approach to slowly increase the tax rates over a span of two years.
Meanwhile, Lau said to support and encourage downstream industry, STA resonates with the Sarawak government’s effort in promoting furniture industry and contributed RM1 million to the Sarawak Timber Industry Development Corporation for the purpose of carrying out skills training and capacity manpower building programmes, including the SayD’signersSarawak to help the development of the furniture industry in Sarawak.
“Downstream timber industry needs not only capital funding, investor determination, availability of competitive raw materials, stable and able supplies of skilled and unskilled workers not only from one country but also close collaboration of market players in competing against other players.
“Perhaps among the most needed would be the encouraging and physically supportive policies from both the Sarawak and the federal governments,” he said.
On foreign workers, Lau said STA hoped that the government would accelerate the recruitment of the much-need workers by expediting the entry process of foreign workers, not only from Indonesia, but also from other source countries like Bangladesh, Nepal and Myanmar.
“Sarawak’s policy to only recruit workers from Indonesia has compounded the issue of shortage of general workers, a situation that if left unaddressed could jeopardise Sarawak’s reputation in the sustainability and continuity of production for export.
“These, along with other pressing issues faced by the industry, were highlighted to Deputy Minister in the Premier of Sarawak Department (Labour, Immigration and Project Monitoring) Datuk Gerawat Gala, during a dialogue session in April 2022,” he added.
