SHAH ALAM - Malaysian online shoppers face a new reality: rising prices for imported Low-Value Goods (LVG) following the implementation of a 10 per cent sales tax on Jan 1.
This tax, coupled with shifting seller strategies sparked concerns about the future of affordable online shopping.
LVG items subjected to the sales tax include all products excluding cigarettes, tobacco products, alcoholic beverages, electronic cigarettes and similar provisions used for smoking, all priced at less than RM500 and imported into Malaysia through land, sea or air.
A survey by Sinar across platforms like Shopee and Lazada revealed price hikes on various LVG items.
Gloves from China jumped from RM88 to RM96.80, while a cement tool from Indonesia saw a RM4 increase.
Headphone, charger and phone case prices also went up by a few ringgit.
Social analyst Lim Sian See, in a Facebook post pointed out that similar to the Sales and Services Tax (SST), the Low-Value Goods Tax (LVGT) has weaknesses compared to the Goods and Services Tax (GST).
This is because no price increase or tax amount was clearly communicated to buyers.
According to him, sellers were simply raising the original prices to cover the LVGT and SST without informing or notifying the buyers.
"I myself conducted a survey. It is true that many items purchased in December have had their selling prices increased today.
"The most significant one is the umbrella I bought at a selling price of RM39.20 on Dec 6 has now increased to RM48 from the same seller.
"Overall, including various discounts, promotions and shipping costs, I paid RM31.32 on Dec 6.
"If I were to buy from the same seller today, the total price I would have to pay has increased to RM46.06, representing a 47.1 per cent increase," he said.
Declining trend in online buyers
Meanwhile, the purchase of foreign online products showed a declining trend since Jan 1.
A foreign beauty product supplier, Ika Nadhira Abd Razak, 25, said that this move has prompted sellers to increase prices to cover sales costs.
"Although the sales tax has only been imposed for a few days, I can see a decrease in buying patterns on platforms like Shopee and TikTok.
"This may be because the public is aware of the price increase.
"We (traders) are not intentionally raising prices, but to reduce our selling costs, we have to do so," she said when contacted.
On Dec 16, last year, it was reported that Malaysia would begin imposing a 10 per cent sales tax on LVG sold online from Jan 1, 2024.
Malaysia was supposed to impose a 10 per cent LVG tax on goods priced below RM500 sold online starting April 1, 2023, under Budget 2022.
However, it was postponed by the Royal Malaysian Customs Department in March, last year.
Another supplier, Nur Haslina Hassan, 26, said that not all items for sale would experience a price increase, unless they were new products imported to enter the online market.
"I will not raise prices if the product is still in stock.
"I will continue to sell it at the same price. However, I expect prices of imported goods to increase due to the government-imposed sales tax," she said.
According to Haslina, to address the issue of declining buyers, she will strategise to increase advertising so that the public is encouraged to make purchases.